Unclear gloom on the emplyment front

The headlines sounded gloomy ("Payrolls Drop for First Time Since 2003", "U.S. Economy Unexpectedly Sheds 17,000 Jobs", "U.S. employers slashed payrolls in January", and "Employment Drops in a Pink Slip Blizzard"), and the headline payroll number was in fact negative (-17,000), but beyond that the gloom on the employment front is anything but clear. Here is the silver lining of the supposedly dark cloud:

1. The -17,000 decline is after the November payroll number was revised up from a mere 18,000 rise to a more substantial 82,000 rise. In other words, rather than a net decline in December, we are looking at a net rise from where he thought we were in November.
2. The "decline" was really limited to construction and manufacturing while the service economy continues to add jobs.
3. As the Bureau of Labor Statistics puts it, the headline payroll and unemployment numbers were "essentially unchanged in January." In other words, the "decline" was not statistically significant.
4. Unemployment actually ticked down, although that may have been more a function of people deciding to stop looking for work.
5. The January numbers will inevitably be revised in a month, and revisions tend to be upwards.
6. Finally, the decline was simply too modest to constitute the kind of "significant" decline needed to mark a true recession.

The bottom line is the "essentially unchanged" character of the numbers. The net of that is that even with a gloomy characterization, the decline is not "significant" enough to mark the onset of a true recession. Yes, we are seeing a slowdown and sluggish growth, but we are not yet seeing a full-bore recession.

Once again we are faced with a "mixed bag" of economic data.

BTW, I do take strong exception to the MSNBC headline of "U.S. employers slashed payrolls in January" since a small decline hardly merits the characterization of "slashed." I also take strong exception to the Associated Press headline of "Employment Drops in a Pink Slip Blizzard" since "a few flakes" hardly constitute a blizzard.

I also have to take strong exception to the MarketWatch headline of "Last pillar of denial is gone" which goes more than a bit overboard and certainly mischaracterizes both the data and the efforts of people seeking the truth about what is really going on.

FWIW, here is the opening paragraph from the Bureau of Labor Statistics:

Both nonfarm payroll employment, at 138.1 million, and the unemployment rate, at 4.9 percent, were essentially unchanged in January, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The small January movement in nonfarm payroll employment (-17,000) reflected declines in construction and manufacturing and job growth in health care. Average hourly earnings rose by 4 cents, or 0.2 percent, over the month.

The important data to watch now are the weekly unemployment insurance reports which would certainly signal any dramatic cutting of jobs. They haven't been for the past month.

-- Jack Krupansky