2010 Economic Calendar
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Event Definitions   |   Today's Calendar

Employment Situation
Released On 2/5/2010 8:30:00 AM For Jan, 2010
PriorPrior RevisedConsensusConsensus RangeActual
Nonfarm Payrolls - M/M change-85,000 -150,000 -40,000  to 75,000 -20,000 
Unemployment Rate - Level10.0 %10.1 %9.9 % to 10.2 %9.7 %
Private Payrolls - M/M change
Average Hourly Earnings - M/M change0.2 %0.1 %0.2 %0.1 % to 0.2 %0.2 %

Highlights
Today's employment report had conflicting trends between the payroll numbers and the household survey. Although the unemployment rate fell unexpectedly, payroll jobs continue to contract. Nonfarm payroll employment in January fell 20,000, following a revised 150,000 drop in December and revised gain of 64,000 for November. In the previous employment situation report, December showed an 85,000 drop and November rose 4,000. However, today's report contains annual revisions and they were down significantly. The December payroll decrease fell short of the consensus forecast for no change in payroll jobs.

The December decline was led by a 60,000 drop in the goods-producing sector which included a 75,000 decrease in construction. Manufacturing employment actually rose 11,000 after a 23,000 fall the month before. Mining advanced 4,000 in the latest month.

The service providing sector rebounded 48,000 after dropping 69,000 in December. The biggest gain in the latest month was in professional & business services with a 44,000 increase, including a 52,000 boost in temp help. This jump in temps may be the biggest positive in today's report. Temp hiring tends to be a leading indicator for overall payrolls. A sizeable gain of 42,000 also was seen in retail trade.

On the downside within services, financial activities declined 16,000 while leisure & hospitality fell 14,000.

On a year-ago basis, payroll jobs improved to minus 3.0 percent in January from minus 3.6 the previous month.

The annual revision to payroll jobs was sharp. Prior to today's release, the drop in employment from the expansion peak in December 2007 was 7.242 million through December 2009. That number is now a loss of 8.404 million-more than a million worse. Through January 2010, the net job loss is 8.424 million.

Wage inflation in January edged up to a 0.2 percent increase, following a 0.1 percent gain the month before. The median expectation was for a 0.2 percent gain in January. Using the BLS's new, expanded definition, the average workweek rose to 33.9 in January from 33.8 in December. This series includes supervisory workers in addition to non-supervisory and production workers. Based on the traditional measure (just non-supervisory and production workers), the average workweek edged up to 33.3 hours from 33.2 hours in December.

From the household survey, the unemployment rate declined to 9.7 percent from 10.0 percent in December. The household survey for January 2010 reflects updated population estimates. The household survey is based on a much smaller survey sample than the payroll survey.

Today's report, from the payroll survey, shows the economy weaker than previously believed due to downward revisions from annual updates. Also, January contracted despite the startup of the hiring of temporary Census workers. One temporary factor that could reverse next month was the sharp drop in construction. This may have been weather related and may reverse and add to February. Overall, the labor sector is still struggling as employers are reluctant to hire.

On the news, the dollar was down against the euro, equity futures were mixed, and Treasury yields were mostly up slightly.

Recent History Of This Indicator
Nonfarm payroll employment should be interesting for January. Not only will traders be watching to see if job growth returns to positive territory but benchmark revisions also will be seen in the latest numbers. Nonfarm payroll employment in December fell 85,000, following a revised gain of 4,000 in November and a revised fall of 127,000 in October. November's rise in jobs ended a 22-month streak of declines but revisions could do away with that modest gain. A big question, however, is whether benchmark revisions are significant. During recession, the estimates for jobs from new firms are often over estimated, leading to downward revisions when benchmark data are released. Growth in average hourly earnings in December came in at 0.2 percent. From the household survey, the unemployment rate was unchanged at 10.0 percent in December. Looking ahead, market estimates for the jobs report might be affected by ISM employment indexes, Challenger, ADP, Monster, and initial claims prior to Friday.

Definition
The employment situation is a set of labor market indicators based on two separate surveys in this one report. The unemployment rate equals the number of unemployed persons divided by the total number of persons in the labor force, which comes from a survey of 60,000 households (this is called the household survey). Workers are only counted once, no matter how many jobs they have, or whether they are only working part-time. In order to be counted as unemployed, one must be actively looking for work. Other commonly known figures from the Household Survey include the labor supply and discouraged workers.  Why Investors Care
 
[Chart]
During the mature phase of an economic expansion, monthly payrolls gains of 150,000 or so are considered relatively healthy. In the early stages of recovery though, gains are expected to surpass 250,000 per month.
Data Source: Haver Analytics
 
[Chart]
The civilian unemployment rate is a lagging indicator of economic activity. During a recession, many people leave the labor force entirely, so the jobless rate may not increase as much as expected. This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis. It reveals the degree to which labor resources are utilized in the economy.
Data Source: Haver Analytics
 

 

2010 Release Schedule
Released On: 1/82/53/54/25/76/47/28/69/310/811/512/3
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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