Economic Update

February 2013

Michael Hespen

National Account Executive

4th Qtr. GDP: -0.1% (Initial Estimate)

Sources: Bureau of Labor Statistics, Wall Street Journal, Bureau of Economic Analysis

Non Farm Payroll Revisions Bureau of Labor Statistics

Four Takeaways From January Jobs Report (Wall Street Journal)

Slow and Steady: Job growth slowed in January, but at a bit better than 150,000 new jobs, the overall

pace of growth stayed relatively steady. The private sector drove the growth, as it has for most of the

past two-plus years, adding 166,000 jobs while the government cut payrolls 9,000. The recent pace of

growth hasn’t been enough to make a dent in the unemployment rate, which rose slightly and has

been more or less stuck since the end of the summer.

Huge Revisions: The real news in today’s report may not be in January’s figures but in December

and November’s, which were revised upward by a combined 127,000 jobs. November’s jobs growth

now registers a fairly impressive 247,000 net gain in jobs (256,000 in the private sector), and

employers added 196,000 jobs in December despite fears of the Fiscal Cliff. The significance of the

revisions goes beyond their sheer size: The Labor Department’s initial estimates often lag behind

shifts in the job market, showing too little growth when hiring is speeding up and too much when it is

slowing down. So today’s revisions could be a sign that the labor market is gaining steam.

Pace of Growth Looks Better: For most of last year, it looked like the economy was adding around

150,000 jobs per month. Turns out, job growth actually averaged a more robust 181,000 jobs per

month for the year. The revised figure reflects not just the November and December revisions but also

the government’s annual “benchmark” revisions, which added 422,000 jobs in the year that ended last

March. With the revisions, 2012 now stands as the best year of the recovery in terms of job growth,

ever so slightly better than 2011, when the economy added an average of 175,000 jobs per month.

Consumer Sector Shows Strength: Retailers added 33,000 jobs in January, and restaurants added

17,000 jobs. The improving housing market may also finally be showing up in construction

employment, which rose by 28,000 jobs and is up by 82,000 in the past three months. But

manufacturing employment was essentially flat, and factories cut back on workers’ hours.

November 2012 revised from +161,000 to +247,000

December 2012 revised from +155,000 to +196,000

Monthly revisions result from additional reports received from businesses since the last published estimates

and the monthly recalculation of seasonal factors. The annual benchmark process also contributed to these

revisions.

2011 2012

Components of GDP 1st 2nd 3rd 4th 1st 2nd 3rd 4th

Consumers 2.22% 0.70% 1.18% 1.45% 1.72% 1.06% 1.12% 1.52%

(Personal Consumption)

*Businesses -0.68% 1.40% 0.68% 3.72% 0.78% 0.09% 0.85% -0.08%

(Gross Private Domestic Investment)

Net Exports 0.03% 0.54% 0.02% -0.64% 0.06% 0.23% 0.38% -0.25% (Exports-

Imports)

Government -1.49% -0.16% -0.60% -0.43% -0.60% -0.14% 0.75% -1.33%

Total GDP 0.08% 2.48% 1.28% 4.10% 1.96% 1.24% 3.10% -0.14%

*Inventories -0.54% 0.01% -1.07% 2.53% -0.39% -0.46% 0.73% -1.27%

component of Business

Number of people employed as a temporary employee

divided by total non farm payroll employment

Temp Employment

Temporary help services lost 8,100 jobs.

Why is the Temp Penetration Rate Important?

“Temporary Help Employment is a Leading Indicator for

Nonfarm Employment—Staffing job trends lead

nonfarm employment by three months when the

economy is emerging from a recession and by six

months during periods of normal economic growth.”

American Staffing Association

Temp Penetration Rate: 1.90% 0.1% Job Loss/Gain: + 157,000 Jobs Unemployment Rate: 7.9% 0.1%

I

Unemployment Rate: Bachelor’s Degree or higher

Oct Nov Dec Jan

3.7% 3.9% 3.9% 3.7%

Source: Bureau of Labor Statistics, American Staffing Association

Nonfarm Payroll – Job Growth Details

Jobs Added/Lost

Private Sector 166,000

Government Sector - 9,000

Total 157,000

Job Losses Change from Previous

Month

Government -9,000

Job Gains Change from Previous

Month

Retail Trade 32,600

Construction 28,000

Professional & Business

Services 25,000

Leisure & Hospitality 23,000

Financial Activities 6,000

Manufacturing 4,000

Education & Health

Services 25,000

- Education -2,000

- Healthcare 22,800

- Social Assistance 4,800

Revisions to 2011 & 2012 BLS Labor Data (Looking Better But A Ways To Go – Wall Street Journal)

GDP Projections Survey of Economists (Wall Street Journal)

http://video.cnbc.com/gallery/?video=300

0144702&play=1

Unemployment Rate Projections Survey of Economists (Wall Street Journal

Source: Wall Street Journal, New York Times Please note: WSJ Projections were released prior to the BLS report, Business Insider Chart of the Day, Calculated Risk Blog

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