Friday, February 4, 2011

U.S. unemployment falls to 9.0 %

The Bureau of Labour statistics has published its January labour force survey which shows that U.S. unemployment has fallen to 9.0 %. The broader measure of unemployment that includes marginally attached workers and those working part-time when they would rather be working full time also has fallen to 16.1 % from 16.7 %. This is positive news although it would be nice to see a larger increase in the number of new jobs created.

Since November 2010 the headline rate of unemployment has fallen from 9.8 % to 9.0 %.

 U6, the broader measure that includes discouraged workers and those working part-time when they would rather work full time has fallen  from 17 % to 16.1 % in the same time period.

If this trend continues, unemployment should  continue to fall provided there are no new shocks to the economy and the Congress does not precipitously slash spending or raise taxes on average and low income earners. The banks and the private sector needs to do more to spend their surpluses through new borrowings to business and new hirings to accelerate the process. Another problem is that the public sector , particularly at the state and local level, continues to shed jobs thereby undermining the recovery.

In Canada the headline unemployment rate rose from 7.6 % to 7.8 % but close to 70,000 new jobs were created. The previous months lower rate apparently encouraged more discouraged workers to rejoin the labour force searching for work thereby driving the headline rate up 0.2 % points. The rate of unemployment also rose in Québec from 7.5 to 7.9 %. The rate in Ontario remained at 8.1 % (where the participation rate is two percentage points higher than in Québec.)

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