Payrolls must expand somewhere around 100,000 to 150,000 per month simply to absorb new entrants to the labor market. As such, the private sector employment growth trend over most of the past year is just barely absorbing population growth. Payrolls will have to start growing at a brisker pace in order to bring down the unemployment rate significantly.
ABA Chief Economist, Jim Chessen stated: “Today’s employment report can be looked at as a glass half full. It is encouraging that the economy continues to add jobs, showing the labor market is improving. However, it is disappointing that a higher rate of job growth is not yet occurring, which is needed to lower the unemployment rate.”
In December, the unemployment rate did fall to 9.4% from 9.8%. However, this was almost entirely due to about 290,000 workers leaving the labor force, not due to new job growth. The labor force participation rate slid to 64.3%, the lowest rate of the cycle thus far. Many workers are likely continuing to feel discouraged and have given up looking for work.
|Payroll Change (000s)||103||71||210||-24||-1||-66|
|Labor Force Particip. R.||64.3||64.5||64.5||64.7||64.7||64.6|