The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
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Two Leaps Forward, One Step Back for Regional Labor Markets
At the Federal Reserve Bank of Atlanta, our turf covers Florida, Georgia, Alabama, and parts of Louisiana, Mississippi, and Tennessee. We often look at these states in an aggregate sense after the U.S. Bureau of Labor Statistics (BLS) breaks out the national employment report (usually released the first Friday of each month) into state-level employment data, which are usually reported two weeks after the national report.
Employment and unemployment data were released last Friday (January 25) from the BLS, which opened its report with this hand-wringer: "In December 2012, nonfarm payroll employment increased in 27 states and the District of Columbia and decreased in 23 states." Only two of the states that had employment increases were within the Atlanta Fed's district. Even though net payroll growth had been faring very well for our district over the last few months, those first few paragraphs in the BLS report did not bode well for the optimism of the remainder of my summary.
There was a net negative change in payrolls in the Sixth District in December (down 9,600 payrolls), which you might suspect since only two of the six states had net positive payroll gains. However, this decrease seemed very unlikely, given that October and November were two of the rosiest months the district had seen for payroll growth since the recovery began. (And, in fact, if you factor out the stimulus-related boost to payroll growth back in 2010, October and November combined had the largest number of new payrolls—more than 120,000—in the Sixth District of any two consecutive months since the recovery officially began in June 2009.)
There has not been an aggregate decline in Sixth District payrolls since the "summer slump" of June 2012 (a loss of 5,800 payrolls), and before that came an even smaller aggregate decline in January 2012 (a loss of 2,800 payrolls).
The Falcons lost, but Georgia's still third (in net payroll creation)
As a native Georgian, I'll point you to the chart above to show the district's net decline can't be attributed to Georgia. In fact, Georgia tacked on the third-largest increase in payrolls in December (14,400), more than any other state in the nation except New York (35,100) and New Jersey (30,200), which were still feeling some recovery effects from Hurricane Sandy. Tennessee was the only other Sixth District state with payroll growth in December, adding 6,000 payrolls. Florida had the largest decline in payrolls last month within the Sixth District, losing 15,300 in December; this was the second-largest decline in payrolls in the nation, second only to California (down 17,500). To be fair to Florida, however, in November, the state tacked on 25,700 payrolls, largely fueling the District's growth for that month (15,300 of those added in Florida in November were in the leisure and hospitality industry, with about two-thirds of those in the accommodation and food service industry), yet Florida's give-back of payrolls in December was much more widespread across industries. November's payroll gains in Louisiana (14,800) were largely given back in December (down 11,400) after shedding many of the retail and construction payrolls that propped up that state's labor statistics in November.
Though the above chart affirms that the Sixth District has long since stopped hemorrhaging payrolls since early/mid-2010, the unemployment rates in these states still leave much to be desired. In Chattanooga last November, Atlanta Fed President Dennis Lockhart said that "it will be helpful to consider the complexity and dynamism surrounding those markets and how improvements are measured." He continued, "Not all important trends are captured well in the data, so reliance on a single statistic to judge the health of the labor market may not be sufficient. Only by analyzing broader trends can a clearer picture emerge." The low-hanging fruit of economic indicators, though, for most economists and analysts alike is the unemployment rate, which can be a good at-a-glance snapshot of a region's economy, though we must all heed President Lockhart's caution in not using it to draw too many conclusions about a region's overall economic health.
In the chart below, I look at how unemployment rates fared in January 2012 compared to the year-end rates, data for which were released last Friday. I also included two maps of the Sixth District from our friends at Economy.com that show how unemployment rates changed over the course of 2012.
The BLS will release the next national Employment Situation Report, which will give us our first glimpse of how U.S. labor markets are faring in 2013, next Friday, February 1, at 8:30 a.m. (You can see the schedule of the BLS's upcoming releases.)
By Mark Carter, a senior economic analyst in the Atlanta Fed's research department
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