The unemployment rate remains stable. The Bureau of Labor Statistics (BLS) reported that the percent of the civilian labor force without a job remained at 10.0 percent in December. Including those marginally attached to the labor force and those working part-time for economic reasons, the “underemployment rate” rose 0.1 percentage point to 17.3 percent. The number of workers unemployed for six months or longer rose by 229,000 to 6.1 million.  While the unemployment rate rose above 10 percent during the 1983-84 recession, the “long-term unemployed” now represent an historically high share of the unemployed (39.8 percent) and the labor force (4.0 percent).  Although the total number of unemployed workers fell by 73,000 in December, this decline may be the result of individuals choosing to leave the labor force instead of continuing to look for a job. The labor force participation rate, which measures the labor force as a portion of the total population, fell to its lowest level (64.6 percent) in almost 25 years as 661,000 workers left the labor force in December. Some economists fear that improvement in the labor market will be masked in coming months if workers who had left the labor force re-enter in response to news of job growth.  If the labor force expands, the unemployment rate may rise even after the economy stops losing jobs.

Employment rose in November, but fell in December. The BLS reported that employers shed 85,000 jobs in December after adding 4,000 jobs in November (see chart). November’s gains marked the first monthly increase in employment since the start of the recession. In December, employment declines continued in the construction (-53,000) and manufacturing (-27,000) sectors, although job losses in the manufacturing industry have moderated over the last 6 months.  Job losses were partially offset by gains in the professional and business services industry (50,000), which includes attorneys, architects, and engineers; and the healthcare sector (22,000).  The finance and insurance sector added jobs (9,900) for the first time since the recession began.  Since the onset of the recession, the healthcare sector has added 631,000 jobs.  Additionally, the temporary help sector, which added 46,500 jobs in December, has expanded for the fifth consecutive month, adding 166,400 jobs since July.  Temporary help is considered a leading indicator of future permanent hiring because employers will often hire temporary workers before adding permanent staff. The number of hours worked, another leading indicator, remained unchanged over the month after increasing 0.2 hours in November.

New orders of manufactured goods continue to rise. The Census Bureau reported that new orders of manufactured goods rose 1.1 percent to $365.3 billion in November. New orders for manufactured goods have risen eight times in the past year and seven times over the past eight months. Excluding transportation, new orders for manufactured goods rose 1.9 percent.  These increases are consistent with the expansion in the manufacturing sector seen in the Institute for Supply Management’s (ISM) Manufacturing Index.  Along with reported declines in inventory levels, increases in new orders are a sign that the manufacturing sector may begin hiring in the coming months.