January Job numbers in perspective

Cynthia Magnuson,
By NFIB

Chief economist for the National Federation of Independent Business (NFIB) William C. Dunkelberg, issued the following statement on the January job numbers, based on NFIB’s monthly economic survey that will be released on Tuesday, February 12, 2013. The survey was conducted in January and reflects the responses of 2,033 sampled NFIB members:

“The first month of the New Year didn’t provide much hope for the months that will follow, at least not on the job creation front, where the trend was positive, but ever-so-slight. For small employers, the average change in employment per firm increased to 0.09 workers, up from 0.03 workers in December. This is the second consecutive month with positive growth, and is sadly the best reading since April 2012. That’s not saying much.

“Overall, 11 percent of surveyed owners (unchanged from December) reported adding employees and nine percent reduced employment (down 4 points). But the vast majority—the remaining 80 percent of owners—made no net change in employment. Translation: stagnation. Forty-three (43) percent of owners surveyed hired or tried to hire in the last three months and 34 percent (79 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions.

“Eighteen (18) percent of all owners reported job openings they could not fill in the current period; this is up 2 points from December, but still historically low. This measure is highly correlated with the unemployment rate, so the NFIB survey anticipates little change in the rate with a little downward pressure.

“As for future job creation, which took a nosedive at the end of last year, plans to hire regained some of the December loss, rising 2 points to a net three percent of owners who plan to increase total employment. It is clear that the fourth quarter in 2012 was weaker—this week’s Commerce Department report confirmed this—and plans have not regained the levels reached in early 2012. Not seasonally adjusted, 12 percent of small employers plan to increase employment at their firm (up 5 points), and eight percent plan reductions (down 3 points). There is not a lot of strength in those numbers, but almost anything is an improvement over December. Not seasonally adjusted, more owners plan to hire than to cut in all Census regions except along the Atlantic coast (Sandy-affected areas) and in all industry groups with the exception of the Wholesale Trades and Construction (a net 0 percent plan to increase jobs, likely a seasonal effect).

“Overall, the NFIB members improved on December levels of hiring plans and job openings measures, but given the abysmal December reading, this isn’t reason for celebration. Washington has done precious little to resolve the uncertainties faced by small-business owners beyond locking in tax rates. The fourth quarter reading for GDP growth is hardly encouraging, but not surprising given the pessimistic sentiment of the small business sector over the same time frame. The reduction in inventory accumulation may not be repeated either, but represents a slowdown in production activity. Even with some recent good news on initial claims, which unfortunately seems to have reversed course again, there isn’t much reason to expect net job gains to be much higher than 150,000 or for the unemployment rate to improve significantly.

“And the administration just announced that they have disbanded the President’s Jobs Council… Another lackluster attempt to spur job growth has once again come to unimpressive end.”

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