BREAKINGVIEWS-U.S. jobs report flatters to deceive

— The author is a Reuters Breakingviews columnist. The
opinions expressed are his own —

By Martin Hutchinson

WASHINGTON, Feb 5 (Reuters Breakingviews) – The drop in the
headline U.S. unemployment rate to 9.7 percent is not what it
seems. Other data were revised to show that 1.2 million people
more than thought have lost their jobs in this downturn.
Seasonal tweaks may have been overdone, too.

Revisions to employment data sharply increased the tally of
jobs lost since November 2007 to an estimated 8.4 million. That
makes the downturn four times as severe as any postwar
recession in terms of jobs lost. Of particular concern is the
continued rise in the number of people unemployed for more than
26 weeks to 6.31 million in January.

At 4.1 percent of the workforce, that too is higher than in
any other postwar recession. The potential for long-term
unemployment problems was underlined by another increase in the
number of workers who have ceased seeking employment — a
figure that rose to 1,065,000 in January from 929,000 a month
earlier.

Seasonal adjustments flattered Friday’s jobs data, too.
Unadjusted, 944,000 non-farm jobs were lost in January, the
vast majority in the construction and retail sectors. But
seasonal adjustments reduced the losses to 20,000 overall.
Since both those sectors were depressed in 2009 and seasonal
tweaks are based on prior years, the adjustments for January
were almost certainly too large.

In the other part of the Bureau of Labor Statistics’
report, the unadjusted unemployment rate rose to 10.6 percent,
with seasonal adjustments delivering the superficially cheering
drop in the headline figure.

The reality is that U.S. unemployment is setting new
postwar records in scope and duration. Things do not appear to
be improving significantly despite the return of economic
growth, which registered quite strongly — if perhaps
unsustainably so — in the fourth quarter of 2009. The recovery
remains worse than jobless so far. That may eventually turn
around, but even after that happens the scars of protracted
unemployment won’t easily disappear.

CONTEXT NEWS

— The U.S. unemployment rate declined to 9.7 percent in
January from 10 percent, the Bureau of Labor Statistics said on
Feb. 5.

— U.S. non-farm payroll employment declined 20,000 in
January on a seasonally adjusted basis.

— Excluding seasonal adjustments, employment declined by
944,000, with retail employment declining by 556,000 and
construction by 358,000, while the unemployment rate rose to
10.6 percent.

— The mean duration of unemployment rose by 1.1 weeks to
30.2 weeks, and long-term unemployment — more than 26 weeks —
rose by 183,000 to 6.31 million, against 2.69 million in
January 2009. Discouraged workers, those not currently looking
for a job, increased from 929,000 to 1,065,000.

— On revised data, 8.4 million jobs have been lost since
November 2007 compared with 2.1 million in 2001-02, 1.7 million
in 1990-91, 2 million in 1981-82 and 2 million in 1974-75.

— BLS report: http://r.reuters.com/fyc97h

— For previous columns by the author, Reuters customers
can click on [HUTCH/]

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(Editing by Richard Beales and Martin Langfield)

BREAKINGVIEWS-U.S. jobs report flatters to deceive