January Jobs Report: Everything You Need to Know

The most recent "Employment Situation Summary" was greeted by a seemingly disappointed media. Describing the increase in nonfarm payroll employment by 113,000 as "stagnant", "weak", and a "big miss."

While the report is only preliminary and will assuredly be revised in the coming weeks and months, it's an important indicator of the current health of today's economy -- and for that reason deserves a second look. 

The reports missed what?
One of the chief reasons for media outcry is reports "missed" analysts estimates. Analysts forecasted between 170,000 and 185,000, while the Department of Labor Statistics, or DOL, reported 113,000. 

Let's keep in mind our focus should be on whether the economy is improving or getting worse -- and not, whether jobs numbers were higher or lower than analyst's guesses (I mean forecasts). 

The fact is nonfarm jobs are up from December, but lower than they have averaged throughout 2013. So, it's moving in the right direction, though, not exactly what we would hope to see despite these being preliminary numbers.

These are exact numbers, right?
Wrong. The DOL suggests, in fact, there's a 90% chance reported nonfarm numbers are within +/- 90,000. 

This means there's a 10% chance the Department of Labor is completely wrong – and a 90% chance jobs increased by as little as 23,000 and as many as 203,000 during January. Even with a fairly large margin for error, it looks like jobs increased, and that's a good sign.

The bad news 
1. Discouraged workers

According to the DOL, "[T]here were 837,000 discouraged workers in January, about unchanged from a year ago." This means there's a city-sized population that's not currently looking for work because they don't believe there's work available.

2. Long-term unemployed is still high

"The number of long-term unemployed (those jobless for 27 weeks or more) [...] declined by 232,000 in January." While this is certainly an encouraging sign, there are still over 3 million long-term unemployed.

3. Retail industry takes a hit

After a less-than-spectacular December, the retail trade industry lost about 13,000 jobs.

The good news
1. The importance of construction

Construction was one of the four industries that saw significant improvement in January. The report suggested 48,000 new jobs were added over the month. This is a huge plus for both construction and financial stocks.

More building creates a greater demand for construction equipment, while more homes and buildings could lend itself to more loan originations for banks and all sorts of new insuring opportunities. 

2. Strong growth in manufacturing

Employment in manufacturing saw an increase of 21,000 jobs in January. An article by the Roosevelt Institute suggested, "Manufacturing is Central to the Economy" -- and I happen to agree.

3. A good sign for college grads

According to Household data, for those 25 and older with a college degree or better only 3.2% are unemployed. This compares favorably to the unemployment rates of those with an associate degree and a high school diploma (or equivalent), which sit at 6% and 6.5%, respectively.  

The overall jobs takeaway
Discouraged and long-term unemployed numbers are still far too high. However, overall job numbers are up (and in some key industries) which is a great sign.

We may be in for a bumpy ride in 2014, but similar to the stock market, there will be ups and downs month to month. But if we're long-term investors, we should still feel hopeful that the economy is strengthening. 

I Just Robbed Wall Street
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have done it before with the likes of Amazon and Netflix. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2834558, ~/Articles/ArticleHandler.aspx, 8/31/2015 1:59:37 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dave Koppenheffer

Dave Koppenheffer, is a contributor for the Motley Fool's financial sector. And much like Dwayne "The Rock" Johnson, when he speaks, he speaks with an earnest vibe and an earnest energy.

Today's Market

updated Moments ago Sponsored by:
DOW 16,557.96 -85.05 -0.51%
S&P 500 1,976.73 -12.14 -0.61%
NASD 4,805.10 -23.23 -0.48%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes