Searching for Glimmers

Like most analysts, I have been combing through the January jobs report to find some evidence of a real turn in the sluggish employment picture. It’s a new year. We cleared the fiscal cliff, albeit with more budgetary chaos to come. Further, the global economy, while not strong, has certainly stabilized from the worrisome posture that was seen through much of 2012. And most of the effects of Hurricane Sandy have likely passed. Some glimmers of light do shine through. But, as I discussed on the radio this morning, our employment challenges are still a grim reality of the slow economy.

It is certainly nice to see the acceleration of payroll employment growth in the final months of 2012. The November gain of 247,000 and the December gain of 196,000 are particularly encouraging given that they went against the grain of growing fiscal uncertainty. But the broader pattern for the year suggests more volatility than real improvement given that the fourth quarter average payroll employment gain of 201,000 was significantly below the 262,000 gain seen during the first quarter.

And the 181,000 average gain for all of 2012 was only modestly better than the 175,000 average gain for 2011. All of this is just too slow. Three and one-half years after the economy bottomed we are still 3.3 million jobs shy of the January 2008 peak for payroll employment. The still too high unemployment rate of 7.9 percent highlights a difficult labor market picture that is causing pain for millions. 

Fortunately, there is a glimmer of light brought about by the embryonic housing recovery. Construction employment appears to be truly firming, averaging about 24,000 during the past four months. I suspect that accelerated construction job gains have played a role in the somewhat encouraging drop in the average and median duration of unemployment in January, the former to the lowest level since 2010 and the latter to the lowest level since early 2009. 

So the first jobs report for the new year is sending mixed messages. The turn in the housing market is starting to have beneficial impacts. But we got ourselves into one heck of a hole and a long climb is still ahead of us.