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6 issues for the jobs report

By Mark Hamrick ·
Thursday, March 6, 2014
Posted: 6 am ET

The U.S. Labor Department releases its monthly look at jobs on Friday. Here are six things to consider when the new reading is posted.

1. The weather effect

Following some mixed economic data recently and a pair of weaker-than-expected employment reports for December and January, the report on February employment may prove inconclusive on the question of how a harsh winter has affected growth. Blaming weather for lackluster reports has become a kind of national anthem for economists lately.

Stuart Hoffman, chief economist with PNC Financial Services Group, doesn't believe it's anything more serious. "I will admit that this may be more faith than statistics at this point," he says, though he notes that new claims for unemployment benefits haven't spiked -- which would be a worrisome sign for the economy.

2. Hiring hard to forecast

Economists are all over the proverbial map with their predictions for the job creation number in this report. Diane Swonk, chief economist with Mesirow Financial, notes that forecasts for jobs added in February range from 80,000 to more than 200,000, an unusually wide variation. Agreeing on the path ahead is difficult when you have little confidence about where you've come from.

3. Who wants to work?

One of the unfortunate reasons the unemployment rate has dipped at times is because of a drop in the number of persons looking for work. This is measured by the very wonky sounding term "labor force participation," which is at the lowest levels in decades. In January, the percentage of persons either working or actively looking for work rose slightly to 63 percent. There's a big debate over why it is low. Note: If you ever find yourself stuck talking to economists and are searching for things to talk about, ask them about labor force participation.

4. Does low unemployment matter?

In our just-released Bankrate quarterly economic survey, the panel of experts we assembled expect, on average, that unemployment will dip to 6.2 percent a year from now. At the same time, the economists expect monthly hiring gains of fewer than 200,000 jobs, well shy of what we've seen during past recoveries.

5. Still waiting for raises

The Federal Reserve has said it's worried that inflation is running below what it considers normal. Part of the mix is that incomes, including wages, are not rising very much. In the last report from the Labor Department, average hourly earnings were up 1.9 percent over the past year. That's continuing the trend of paltry earnings growth seen since the Great Recession.

6. The Fed may shrug

In her appearance before a Senate panel last week, Fed Chair Janet Yellen attributed recent economic softness to the weather. She indicated that the central bank will likely continue reducing its asset purchases in coming months. Sterne Agee chief economist Lindsey Piegza says the Fed will require "a very clear weakening trend" to tear up the asset purchase reduction game plan. Specifically, Piegza thinks the hiring trend would have to slip below 100,000 jobs a month for the Fed to "taper the taper," as she puts it.

Do you think the economy will show some signs of life this spring? Or are we stuck in a rut?

Follow me on Twitter: @hamrickisms.

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