U.S. unemployment falls to 9.4 % in December

8:32 -8:45 a.m.

The American unemployment rate has fallen to 9.4 % from its previous level of 9.8 %. U6 the broader measure of unemployment has also fallen from 17 %  to 16.7 %. This is  definitely positive news. The labour participation rate has also fallen by 0.2 percentage points as more former active participants left the work force as discouraged workers than in previous months or simply retired.As the economy gradually recovers and unemployment falls, more of these discouraged workers will re-enter the labour market thereby slowing the rate of drop in the unemployment rate. There were some 103,000 additional new jobs in the non farm sector principally in the leisure industries, arts and entertainment and other services. The federal government gained 10,000 employees but state and local governments lost a total of 20,000 jobs so the net impact from the government sector was negative.Not what is needed and the product of fiscal conservatism and limited resources at the state and local level. Overall manufacturing employment remained stable.Construction stagnant.

Some analysts had predicted a larger gain in new employment but the gain that has occurred is welcome news nonetheless. As the new stimulus makes its way through the economy and animal spirits among employers and investors improves the rate should continue to drop by small amounts with occasional setbacks so long as the fiscal conservatives in  Congress are held in check.

In Canada despite a small rise in the number of people employed the headline unemployment rate remained at 7.6% for December.

The table below is reproduced courtesy of the U.S. Bureau of Labour statistics. Its shows quite clearly the size of the task ahead. We can easily compare the recovery phase of the 1981-83 recession and the 1990-92 recession with current circumstances. In the 1980s recession, recovery in the employment markets only began in January of 1983 when for the first time in 17 months there was an actual rise in employment as opposed to a fall in the numbers. In that month there were 225,000 additional new employees compared to the previous month. The next month, February the employment numbers reverted to a reduction of 78,000 but for every month thereafter with the exception of August of 1983 and  June 1986 the numbers were all positive until the next recession was underway in August of 1990. Also note the size of the monthly additions at the beginning of the recovery typically in the 200,000 plus range.

After recovery was well established and the unemployment rate had dropped substantially the size of the monthly additions diminished from time to time to substantially lower levels but the numbers remained positive all the way through to the summer of 1990 when the new recession was underway.In the recovery phase of the 1990s recession however the positive numbers began appearing in the summer of 1991 and for the next 15 months they were very modest indeed, averaging less than 100,000 per month.
The unemployment rate  dropped only modestly over that time period. But during  the next twelve months the additions to the ranks of the employed were between 161,000 and  173,000 per month in two of the months and were in excess of 240,000 in nine of the months. It may well be that this recovery is closer to that of 1992-95 than the recession in the early 1980s.

MONTHLY ADDITION TO U.S. NON FARM EMPLOYMENT (1000s)

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Annual
1980	131	79	112	-145	-431	-320	-263	260	113	280	256	195
1981	95	67	104	74	10	196	112	-36	-87	-100	-209	-278
1982	-327	-6	-129	-281	-45	-243	-343	-158	-181	-277	-124	-14
1983	225	-78	173	276	277	378	418	-308	1114	271	352	356
1984	447	479	275	363	308	379	312	241	311	286	349	127
1985	266	124	346	195	274	145	189	193	204	187	209	168
1986	123	107	93	188	125	-93	318	113	346	187	186	204
1987	171	232	249	338	227	171	346	170	229	492	231	294
1988	94	452	276	245	227	363	223	121	340	268	339	289
1989	262	258	192	173	118	117	39	47	249	111	277	95
1990	342	245	215	40	149	17	-42	-208	-82	-161	-144	-60
1991	-119	-306	-160	-211	-128	87	-47	15	35	12	-58	23
1992	49	-66	50	158	126	60	71	141	35	177	140	211
1993	310	242	-51	309	265	173	295	161	241	277	261	308
1994	268	201	462	353	331	315	363	300	354	207	423	274
1995	321	209	222	162	-16	231	79	271	245	147	148	131
1996	-19	434	263	161	323	278	232	196	220	243	296	167
1997	230	301	312	291	256	253	283	-18	508	339	303	299
1998	270	189	144	277	401	212	119	352	218	193	284	342
1999	121	410	106	376	213	266	291	192	202	408	294	294
2000	249	121	472	286	225	-46	163	3	122	-11	231	138
2001	-16	61	-30	-281	-44	-128	-125	-160	-244	-325	-292	-178
2002	-132	-147	-24	-85	-7	45	-97	-16	-55	126	8	-156
2003	83	-158	-212	-49	-6	-2	25	-42	103	203	18	124
2004	150	43	338	250	310	81	47	121	160	351	64	132
2005	136	240	142	360	169	246	369	195	63	84	334	158
2006	262	326	304	174	31	69	232	141	100	43	201	177
2007	194	104	239	92	149	55	-20	-71	52	86	128	70
2008	-10	-50	-33	-149	-231	-193	-210	-334	-458	-554	-728	-673
2009	-779	-726	-753	-528(C)	-387(C)	-515(C)	-346(C)	-212(C)	-225	-224	64	-109
2010	14	39	208	313	432	-175	-66	-1	-24	210	71(P)	103(P)
C : corrected P : prelimi