The real unemployment rate – January 2019

The real unemployment rate – January 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 freaking the markets out prior to the report. But about those headline numbers – we crushed it in December and ended 2018 with the best job's growth of the year and in years! 

  • Headline unemployment rate 3.9% (up from 3.7% in November – down from 4.1% year over year)   
  • 312,000 jobs added in December 
  • Positive revisions totaling – 58,000 jobs, so the net number was actually +370,000!

Top industries for hiring:              

  • #1 Healthcare     
  • #2 Food service  
  • #3 Construction

There was strength pretty much everywhere. Listing a top three really doesn’t tell the full story. Job growth accelerated in industries like manufacturing as well which added another 41,000 jobs in December. When you see construction and manufacturing ramping up hiring to the best levels in a generation it emphasizes the strength of the economy overall. Too many people watched stock prices in December and assumed something was wrong with the economy. It’s proven to be just the opposite. A correction in the middle of the strongest economy in a generation that was still gaining strength to end 2018. 

Now for the real unemployment rate once underemployed and long-term unemployed people are accounted for:              

  • Actual: 7.6% down from 8.1% yoy    

Unlike the base rate which rose because more people re-entered the jobs market looking for work, the real unemployment rate didn’t rise showing that the progress that is being made is benefiting those who had been long-term unemployed, underemployed or marginally attached to the workforce. Speaking of which... 

Other key takeaways:                

1. When the long-term unemployed, marginally attached and underemployed are factored in - the real unemployment rate is lower but still close to being double the base rate 

2. The forgotten folks include 1.3 million are long-term unemployed, 4.7 million are underemployed & 1.6 million are marginally attached to the workforce.    

3. The labor participation rate improved to 63.1%      

More than 300,000 that fit into one of those categories obtained work in December. That’s exciting – the economy has reached the point where those who’ve been left behind are finding opportunity as well. It doesn’t make for the most exciting unemployment rate headlines, but it does when you look at the real unemployment rate.

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