Employment - only marginal improvements expected

The BLS has published a monthly “Employment Situation” report for February 2012. For establishment survey data, the BLS has estimated that “nonfarm payroll employment rose by 227,000 in February”. This is a good figure which is subject to revision.
Here we focus on the household survey data, which include the level of employment and the rate of unemployment. Figure 1 presents the estimated number of employed since 1990. There is a fall between 2008 and 2009 from ~147,000,000 to ~138,000,000, i.e. by 9,000,000. This is a huge drop. Since 2010, the level of employment has been steadily increasing and is of 142,065,000 in February 2012.  There is a step between December 2011 and January 2012 which is induced by a large revision to population controls, which is also seen in Figure 2 depicting the evolution of civilian non-institutional population.  The population curve is a bit weird due to such corrections and revisions (we have explained and accounted for this effect here). One should be careful with the BLS data.  

The level of employment is driven by the overall population and the rate of participation in employment. Figure 3 displays the employment/population ratio since 1990. Unlike the level of employment, the rate has not been growing since 2010. There were weak fluctuations between 58.7% and 58.3%. This is close to the inherent uncertainty of employment measurements. In February 2012, this rate is 58.6% which is marginally (+0.1%) above that in January. This might be a transient improvement if the curve will repeat the pattern observed in 2010 and 2011, when local peaks (as in February) were followed by falls.  

All in all, the rate of employment is at its lowermost level since 1983. And it does not show any strong signs of recovery.  

The rate of unemployment, UER, is 8.3%, i.e. at the same level as in January. Figure 4 illustrates the evolution of UER which has been falling since October 2010. We have projected the rate of unemployment to fall to 7.8% in December 2012. This may also result in a slight improvement of the E/P. However, the UER has been falling due to diminishing labor force. Figure 5 shows that the level of labor force has been falling rather than rising since 2008.

We expect the rate of unemployment to drop but this process will not be accompanied by rising employment/population ratio.  The level of employment will be growing proportionally to the civilian population.

Figure 1. The number of employed. Notice a step between December 2011 and January 2012 related to the change in population controls. 

Figure 2.  Civilian non-residential population. Notice several corrections induced by population controls.

Figure 3. Employment/ population ratio. Almost no change since 2009.

Figure 4. The rate of unemployment.
Figure 5. The level of labor force. 

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