January Jobs Report Brings Good News and a Data Lesson
Earlier today, the BLS released the jobs report for January 2017 and the news is not bad. While the unemployment rate ticked up slightly to (a still low) 4.8 percent, other indicators came in very strong. Nonfarm employment increased by 227,000 jobs in the month.
Labor force participation edged up to 62.9 percent and this offers us another teachable moment. Students may be confused as to how 227,000 new jobs were created and yet the unemployment rate increased. One reason is that the labor force increased by 76,000 workers. Therefore, many new workers entered the labor force and many of these found jobs - all of this is positive. But the unemployment rate still climbed because some of these new labor force participants did not find work (yet). These workers are probably frictionally unemployed: they may find work eventually but it takes some time to match workers with available jobs.