Although the number of payroll jobs declined for the first time in more than four years on February 1, things might not be as bad as they seemed.
According to the U.S. Labor Department, [1]payroll jobs fell by 17,000 in January after an 82,000 gain in December. That came despite [2]a decrease in the unemployment rate – a separate survey conducted by the Labor Department found.
But CNBC “Street Signs” anchor Erin Burnett advised viewers on her February 1 broadcast not to be too alarmed because that lower jobs number reported is one of “the most misunderstood stories.” There’s a variable the Labor Department always revises in the month of January that affects the jobs number.
“[T]here’s a system out there where basically what happens is the government makes some assumptions about how many jobs are created or lost every month,” Burnett explained. “How many businesses are created – they can’t check it every single month, so they have to make some assumptions. It turns out if you look out over history they always do the ‘businesses dying estimate’ in the month of January – as a matter of fact, always in the month of January.”
Burnett pointed to historical data to demonstrate this trend.
“Last year [2007] they assumed 193,000 jobs were lost in January,” Burnett said. “The year before [2006] – 280,000. The year before [2005] 321,000. The year before [2004] 211,000. Now, it just puts today’s number in context since we did see an unexpected drop in jobs., the first overall drop that this economy had registered in four-and-a-half years.”
This point was missed in a lot of reports seeking to accentuate the worst, especially from CBS News, who called the jobs report “another body blow.” But as Burnett explained, there is a more optimistic way to view the data.
“Certainly it bears thinking that perhaps there are major assumptions in there that may mean that number is a whole lot less worse than thought,” Burnett said. “We’ll only know as time goes on. But, an interesting way to look at it and look at the glass half full.”