The latest employment data are quite encouraging, though some may have overstated the case for enthusiasm.

Yesterday the Bureau of Labor Statistics reported that U.S. employment rose by 193,000 jobs in January. Larry Kudlow says it’s time to break out the drums:

Economic pessimists have had a field day ever since GDP was reported a week ago at only 1.1 percent for the fourth quarter. But the latest jobs report released on Friday blew them out of the water. Including revisions, January employment is a huge 317,000 above the initial December level. In fact, over the past three months, non-farm payrolls have increased an average 229,000 per month. That’s explosive.

SCSU Scholars also points to the positive earlier revisions along with the January growth figures. I’m not quite sure where Larry is getting this 317,000 figure, but I am inclined not to make too much of the data revisions. As the table on the right reveals, the revised figures released yesterday show 140,000 new jobs in December, rather than the 108,000 December job growth figure that was reported on January 6. However, as a matter of mathematics this is entirely due to the fact that the BLS now says there were fewer people working in November (only 134,231 claimed now versus 134,360 claimed January 6) rather than because there were more people working in December (only 134,371 claimed now versus 134,468 claimed January 6). Deciding that fewer people overall are working than you thought may indeed mathematically make the growth rate appear larger, but it’s not clear that it’s something we want to give an extra cheer about.

Notwithstanding, 193,000 is solid growth, much better than we’d expect to see if the economy were languishing to the degree that the 1.1% 2005:Q4 GDP growth rate could suggest. And it appears that the job growth was sufficient to bring the unemployment rate down from its previous 4.9% to a current value of only 4.7%. That is the best value in five years and significantly below the 5.6% average rate of the last half century. Angry Bear and Outside the Beltway
downplay this, noting correctly that the total growth in the number of people working is substantially less than what we’ve usually seen in a typical expansion. However, as I’ve argued previously, economists do not have a solid basis for claiming that a lower labor force participation rate is necessarily a bad thing. If mothers choose to stay at home with their children or teenagers choose to spend more time with schoolwork, it’s not a sign that something is terribly wrong; Dave Altig and William Polley have more on this. And again, regardless of what you make of the labor force participation trends, a 4.7% unemployment rate is not what you’d be expecting to see if you thought the 2005:Q4 GDP figures were a harbinger of what’s in store for 2006:Q1.

Overall, I find plenty of reason to put on a , but it seems premature to break out the .