The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
The blog's authors include staff from the Atlanta Fed’s Regional Economic Information Network and Public Affairs Department.
Postings are weekly.
Half Empty or Half Full?
The U.S. Bureau of Labor Statistics (BLS) uses two monthly surveys to gauge the health of the labor market, both nationally and at the state level. For the Sixth Federal Reserve District, which survey you focus on in January might say a lot about your own preference for optimism or pessimism. Payrolls contracted in every Sixth District state in the state establishment survey; however,every Sixth District state’s unemployment rate declined in the state current population survey, with the exception of Alabama’s, which remained unchanged at a rate safely below the district and national rates of unemployment.
The bad news first
January was not a banner month for Sixth District payroll growth; in fact, the District kicked off the year with some relatively lousy labor market figures, according to new data out this week from the BLS. Last year, the Sixth District averaged about 33,600 new payroll jobs per month, but during the month of January alone, Sixth District states lost an aggregate 24,400 payrolls. On net, the Sixth District has not had a negative monthly payroll figure since July 2012, when the District lost about 3,900 payrolls, and to see a one-month loss the size of January’s, you’d have to look back to September 2010, when the Sixth District was still brushing itself off in the aftermath of the recession. (For reference, the largest one-month decline for the Sixth District as a whole was in May 2009, when 126,900 payrolls were cut across Sixth District states.)
However, to keep January’s payroll data in perspective, these one-month blips have not been unheard of throughout the recovery, and state and regional data from the BLS tend to be much noisier than the headline national figures that come out on the first Friday of every month. In fact, each year since 2010, we’ve seen incoming regional data grow a bit softer early on in the year, a phenomenon referred to previously by SouthPoint, various other media outlets, and on a few occasions by Atlanta Fed President Dennis Lockhart as a “spring swoon.” (Previously, these “swoons” have come a bit later in the year; maybe it’s seasonal adjustment procedures at the BLS, and maybe it’s because of other reasons.) Though one month of negative payroll data is not in itself a trend by any means, the last four months of data from the BLS do seem to show a pattern (see the table).
Where and to what degree?
All six states in the Sixth District shed payrolls in January. Alabama had the largest decline in payrolls among Sixth District states in January, losing 8,200 payrolls during the month. Louisiana had the second-largest decline, dropping 6,900 payrolls. Mississippi payrolls dropped by 4,000, and payrolls in Florida (down 2,600) and Tennessee (down 2,100) fell by similar amounts. Georgia shed the fewest number of payrolls in January, giving up 600 payrolls, on net.
A couple of patterns seemed to emerge across state lines in January. Most notable are very large declines in retail industry payrolls (see the table). Employment in health care and social assistance also appeared to suffer in January.
Retail me not
A decline of 10,900 payrolls in one sector, in one state, in one month (as the table above shows Florida experienced) warranted a call to our friends at the BLS. I was told that January is typically a weak month for hires, and the retail sector is particularly sensitive to seasonality. Retailers are usually coming off the much busier holiday season and are beginning to wind down staffing levels. Though the BLS strives to account for this in its seasonal-adjustment procedures, it’s virtually impossible to correct for all of it, especially in such a volatile economic and meteorological environment. (Even Florida had a colder winter than usual. While we were digging ourselves out of the epic—for us—snow storms in Atlanta, a friend in Miami reported temperatures “down into the upper 60s” and needing a light jacket in January.)
To get a greater level of detail on which kinds of retailers in Florida were letting go of the most jobs, we have to use data that are not seasonally adjusted. On a nonseasonally adjusted basis, the scary-looking payroll figure (a decline of 10,900) seen above becomes a jaw-dropping 34,000 decline, though much of this drop is the result of standard holiday employees leaving temporary positions (see the table).
But unemployment rates are headed in the right direction…
Despite a decline in payrolls from every state across the District in January, state unemployment rates continued their slow downward crawl in all District states, with the exception of Alabama, which remained unchanged for the month at 6.1 percent (see the chart). It’s not uncommon for the two surveys to appear to be at odds with one another. The payroll survey is of employers—or “establishments”—and the household survey is (more intuitively) a survey of households; that is, of individuals. Both surveys attempt to measure employment. However, since it is necessary to speak to actual people (as opposed to speaking to a “business”) to determine the rate of unemployment for a given area, the unemployment rate is derived from the household survey. But since these are both surveys that are only able to capture responses from a small sample of people, disagreements between the two occur. (Unemployment rates can also decline while payroll growth is weak or negative because of a declining labor force, but that wasn’t the case this month. Four out of six District states actually saw increases in their labor force—Louisiana and Mississippi were the exceptions, and their labor forces only shrank by 2,000 and 300 people, respectively.)
Of Sixth District states, Louisiana had the lowest unemployment rate in January. There, the unemployment rate fell a half percentage point to reach 4.9 percent. Alabama’s rate of unemployment remained at 6.1 percent over the month, and Florida’s dropped 0.2 percentage point to reach 6.1 percent.
Three states still have unemployment rates higher than the Sixth District aggregate rate of unemployment, which fell to 6.5 percent in January. Tennessee tied with Louisiana in January for the largest drop in its unemployment rate, falling a half of a percentage point to reach 7.2 percent. Georgia’s unemployment rate ticked down slightly to reach 7.3 percent, while Mississippi continued to have the highest unemployment rate in the Sixth District, despite its rate falling 0.3 percentage point to reach 7.5 percent in January.
The next regional and state employment and unemployment report, reflecting data for February, is scheduled to be released next Friday, March 28, at 10:00 a.m. The next national employment report is scheduled the following Friday, April 4, at 8:30 a.m.
If you want to stay abreast of the latest Federal Reserve research and publications surrounding regional and national labor markets, as well as a host of other topics, you can check out the Atlanta Fed’s newly searchable Human Capital Compendium, which puts you at the forefront of developments related to labor markets and workforce development across all 12 Reserve Banks.
By Mark Carter, a senior economic analyst in the Atlanta Fed’s research department
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