The real unemployment rate – February 2019
Bottom Line: It's always that case that there's a lot more to a monthly employment picture than the jobs added or lost and base reported unemployment rate. There’s a lot more to the employment report than just a couple of headline numbers – especially against the backdrop of economic concerns that'd been overstated due to the stock market correction in December followed by the partial government shutdown. As we saw in December the jobs economy was still surging through year end.As for January’s highlights– the great news continued.
- Headline unemployment rate 4%
- 304,000 jobs added in January
- Negative revisions totaling – 70,000 jobs, so the net number was actually +234,000
Top industries for hiring:
- #1 Healthcare
- #2 Food service
- #3 Entertainment
There was strength pretty much everywhere. A few important points.
- The unemployment rate was artificially skewed higher due to furloughed government employees who filed for unemployment
- The government numbers continue to contain massive revisions
- Overall hiring has accelerated to an average of 241,000 jobs per month over the past three months
Now for the real unemployment rate once underemployed and long-term unemployed people are accounted for:
- Actual: 8.1% down from 8.2% yoy
I’m not going to spend too much time parsing the details here because again, these numbers are skewed by furloughed government workers who really were/are employed but were able to collect unemployment in addition to receiving full back pay, even if they didn’t work at all during the 35 days and were just voted a 2.6% raise last week in Congress. But that's a different topic for a different story.
Other key takeaways:
1. When the long-term unemployed, marginally attached and underemployed are factored in - the real unemployment rate is more than double the base reported rate
2. Those unaccounted for in the base unemployment rate include 1.3 million long-term unemployed, 5.1 million are underemployed & 1.6 million are marginally attached to the workforce.
3. The labor participation rate improved again to 63.2% (best in 5.5 years)