Auction.com: Job Numbers Fall Short Again

IRVINE, CA-The Bureau of Labor Statistics has released its January Employment Situation report, from which economists are noting a continued downturn in momentum that began in late 2013 with gains lower than predicted. Chris Muoio, senior associate and economist with Auction.com Research, says that the report came in below expectations once again, with January showing 113,000 jobs added to the economy, an improvement from December's revised gain of 75,000, but well below expectations and the growth rate seen last year.

"Labor momentum has slowed in the last few months," says Muoio. "Despite the below-average payroll gain, unemployment continued its descent, declining 10 bps from December to 6.6%. At least this decline was not due to continued erosion in the labor force. Labor-force participation, something we have been closely monitoring, ticked 20 bps higher in January, measuring 63%. This still marks a generational low and an unhealthy level, as recent reports have shown only one-third of the decline in labor force to be due to the aging population, with the rest due to economic reasons."

Muoio also notes that the Employment Acceleration Index continued to erode in January despite the uptick in headline growth, measuring -21.6 on a scale of -100 to 100. "This is the most negative reading we have seen in several months and is due to persistent job losses in the large government sector."

However, despite poor headline figures, Muoio says pockets of strength do exist in the economy. "The shale oil boom continues to drive massive gains in the sector, with petroleum and coal manufacturing and oil-and-gas extraction both showing solid employment growth of 2.7% over the last three months and 12.3% and 4.6% respectively over the last year. This marks continued acceleration in the sector and points to continued gains in the oil patch for some time to come. Mining, excluding oil and gas, is now seeing growth as well, with employment rising 1.2% over the last three months, though payrolls remain 1.2% lower than a year ago."

The construction sector is also seeing positive outcomes, with both residential and non-residential building construction showing strong gains over the last three months and year. Muoio says that heavy engineering has been the laggard due to its closer ties with government funding, with employment falling 0.3% over the last three months. "The housing recovery remains a positive for economic growth, despite the stall seen recently in home sales and prices."

Temporary-help and employment services were among the top-performing sectors, a disappointing trend, says Muoio. "It is very late in the economic cycle for temporary hiring to be this strong of a contributor to growth, and we believe it is due to the continued reticence of firms to hire full-time in the face of still-uncertain healthcare costs and regulations."

He also notes that the healthcare sector was tepid once again in January, as only outpatient care centers saw payroll gains of more than 1% during the last three months. "The healthcare sector had been a secular underpinning of growth to the economy, and the slowdown has dragged headline figures with it. We expect that the aging population will continue to drive gains in the sector, but the implementation of regulation and reform appears to be slowing growth."

Lastly, Muoio says the government sector remains a net drag on growth, though not a severe one. "Only local government excluding education and state government education remained stable over the last three months, with every other sector showing varying degrees of decline. The federal government saw employment fall 0.3% over the last three months and 3% over the last year. The continued malaise in the federal government will be a drag on the DC area in particular. We reiterate that stabilizing home prices will continue to improve the fiscal conditions of local and state governments, diminishing the drag. The federal government though is stuck in a mid-term election year with a rancorous Congress, minimizing any expectation of a turnaround in the immediate future."

As GlobeSt.com reported last week, as the housing market recovers, Auction.com is shifting its business approach, Rick Sharga, EVP of the firm, tells GlobeSt.com. Originally focused on moving the huge volume of distressed assets borne of the Great Recession, Auction.com is now working more with non-distressed assets.