An Early Spring for the Job Market?

Maybe the fact that Punxsutawney Phil — the groundhog named after a town in Pennsylvania — didn’t see his shadow this year points to another kind of early thaw: in the job market. According to the government’s data released today, unemployment now stands at 9% — down by .4 percentage points for the second month in a row.

The total number of unemployed workers in the U.S. is now 13.9 million, compared with 14.5 million in December. Meanwhile, non-farm payroll employment had a net gain of 36,000 jobs, the U.S. Bureau of Labor and Statistics said. Employment was higher in January in manufacturing (49,000 new jobs) and in retail, which added 28,000 jobs — 15,000 of which were at clothing stores. The Bureau’s press release noted that health care employment “continued to trend up” during the month, although not as robustly as before: The sector added 11,000 new jobs in January, whereas it had averaged 22,000 during the previous 12 months.

But is the outlook as positive as it seems? According to Wharton management professor Peter Cappelli, the recent figures only tell part of the story. “I don’t think this is good news. The economy added only 36,000 net jobs, while population growth adds about 140,000 potential workers in the same period. The reason the unemployment rate went down, therefore, is only because more people gave up looking and are no longer counted as ‘unemployed.’”

Matthew Bidwell, also a Wharton management professor, says he would be reluctant to read too much into one month’s employment figures, “particularly when different data sources point in different directions. The payroll numbers are disappointing, and the overall employment/population figures only grew by .1%, which is not indicative of a strong movement of people back into the workforce. Both of those suggest that the labor market may not be improving that rapidly. On the other hand, other figures — such as the manufacturers’ index — have been strong in recent days. Across the board, there are probably grounds for cautious optimism.”

As for job losses last month, construction (32,000) and transportation and warehousing (38,000) were hit the hardest. The Bureau speculates that the unusually harsh winter weather in much of the country may be to blame for the decline in construction jobs. If that’s true, perhaps it’s a good thing Phil didn’t see his shadow.

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