There is a one-week lag on the army of unemployed measured by the continuing jobless claims, but that figure rose by about 64,000 to 3.51 million.  Again, there is a one-week lag to that data but it goes against the improving conditions in the weekly data at least on new claims.

With news of a deal being reached in Europe this morning, investors have just one more small bit of data to cheer about to support a bullish economic thesis. S&P and DJIA futures are now in positive territory.

JON C. OGG

Jon Marino of PEHub.com noted that P.E. firms are hiring and referenced a follow-up report for BDO USA’s third annual private equity “PErspective” report… 57% of private equity executives increased professional staffing and 62% plan to hire again this year.  This is a complete reversal from the layoff waves of prior years.  Here is more detail from that report.

Whether you like millionaires or billionaires or hate them, the one aspect that is so unfairly portrayed about companies bought by private equity firms is as follows: Most businesses bought by private equity firms need to be turned around or need to be run better.  Sure, they get leveraged up and they scrap inefficient operations.  The dirty secret that private equity firms are not defending enough is that many of these companies would have headed for bankruptcy in the long-term if they had not stepped in.  If that results in a liquidation rather than a pure bankruptcy, guess how many jobs get lost at those companies… all of them, rather than some.

The business sector is not just a one-way street.  Companies hire workers in good times and most fire in bad times.  We even ran our own 2011 Layoff Kings.

JON C. OGG

A cut of 450,000 public sector jobs in the U.S. might not devastate the economy, but it certainly would wound it deeply. Over the past six months, the number of jobs added on average per month has been about 120,000. The loss of 450,000 jobs could take several months to overcome. In the meantime, the government would carry the cost to support those who have become unemployed, and the growth of consumer spending, so critical to GDP, would face another setback.

The 15,000 jobs cut are another reason to question the power of austerity to fix national deficits and, eventually, bring down national debt. Greek unemployment is already 13%. Another 15,000 jobless people would increase that by half a percentage point. And more cuts in the private labor force of Greece are likely, as are cuts in the pay of those who will keep their jobs for now. The insult to a Greek recovery is well beyond the 15,000.

There is no guarantee that if austerity fails, because the Greek economy does not recover in the next year, that those who provide funds to Greece will ask for more cuts in government expenditures. One of the easiest ways to do that will be to set another tranche of layoffs. It is usually easier to identify people than to sift through complex government programs for budget cuts.

A loss of 15,000 Greek public sectors workers would be close to half a million jobs in the U.S. The American economy has gained strength, but layoffs of that size would undermine whatever gains have been made here in the past two quarters.

Douglas A. McIntyre

The official unemployment rate was put at 8.3% versus a prior reading the month before of 8.5%.  The private sector’s contribution was even better at 257,000 and the government sector was -14,000 jobs.

Bloomberg had the consensus targets from its economist surveys at 135,000 on the non-farm payrolls and a static 8.5% in the official unemployment rate. Dow Jones had only 125,000 expected in non-farm payrolls.  This is the lowest official unemployment rate since February of 2009.

Another sweetener to the pot is that the payrolls in November and December were revised higher by 60,000 more jobs than what was reported.

The number of (the counted) unemployed is now at 12.8 million and that is roughly a 3-year low.

With 2012 being an election year, both side of the political aisle are going to be watching these figures as closely as investors.  The FOMC may now have to already consider lowering its unemployment rate target for 2012, and that could make a change of opinion on ‘exceptionally low interest rates through the end of 2014′ according to trader logic.

JON C. OGG

To smooth out the weekly data, the four-week average fell by 2,000 to 375,750.  The broader measurement of the army of unemployed is measured by the continuing claims (with a one-week lag) and that figure fell by 130,000 to 3,437,000 for the week ended January 21.

With an FOMC outlook of 8.2% to 8.5% in unemployment rates in 2012 and with economists mostly expecting 8.5% unemployment on Friday, today’s data shows no reason to expect much difference in the projected data on Friday in unemployment and in non-farm payrolls.

JON C. OGG

This was actually under the average of just over 101,000 from the last eighteen years and January does usually act as one of the larger layoff months. This monthly report counts and categorizes announcements of corporate layoffs based on mass layoff data from state departments of labor.

Today’s data is unlikely to alter the expectations for Friday by much.  On last look, Bloomberg was calling for a static 8.5% unemployment rate and 135,000 in new non-farm payrolls.

JON C. OGG

ADP noted that small businesses were 95,000 of the 170K; Medium businesses were 72K; Large business was only 3K… The goods producing sector was 18K; the services sector was another 152K.  This may help to maintain a positive tone for non-Farm payrolls due Friday.  Bloomberg has a consensus of 135,000 for that figure due at 8:30 AM EST on Friday morning.

It does need to be noted that the December huge number report was revised down a bit.  It was still way above what was the government figure at the time, but lower nontheless.  The December figure was revised lower to 292,000 from a prior much more aggressive 325,000 reported.

The U.S. should be in a better position to set aside funds to help young people find jobs. It does not have to coordinate the needs of a large number of nations with different needs. The U.S. deficit may be high and the national debt may be growing at an unprecedented rate. But America is not in a recession, while much of Europe appears to be.

There is one similarity between the U.S. and Europe. Youth unemployment in America is a local problem. Joblessness is much higher in some parts of the country than in others. The federal government would need to acknowledge that. Congress would need to agree that not every district and not every state should get equal amounts of aid. Connecticut does not need the same level of stimulus as Mississippi. But Congress has had trouble agreeing on a number of financial and economic issues, particularly budget reductions to balance the budget. Unemployment among the young may be added to the list of issues that are debatable.

The chances for aid to states where a large percentage of 16-to-24 year olds are out of work compared to the rest of country will go unaddressed. It will go unaddressed for the same reasons that the worst housing markets in America are not treated differently than those that are in relatively good shape. A congressman from Connecticut may object to tax money going to Mississippi while little goes to his state. The unemployment problem among the young will be hostage to the idea that each state’s trouble should be addressed equally to all others. And, it should not be.

Douglas A. McIntyre

Blomberg had a consensus reading of about 383,000 expected and the lowest projected claims figure we saw was at 370,000.  This week’s figure is hard to argue negatively against despite the caveats of labor participation.

The four-week average decreased by 3,500 to 379,000.  As far as the army of unemployed, the continuing jobless claims (with a one-week lag) fell by a whopping 215,000 down to a new reading of 3,432,000.  The continuing claims will have some of the same arguments about labor participation, but that number is good to see coming down and it sets the tone for yet another big improvement next week.

JON C. OGG

A new Gallup polls shows that:

Job creation by the U.S. federal government fell further into negative territory in December 2011 with Gallup’s Job Creation Index at -20, worsening from -15 in November and from -12 in October. While 23% of federal employees in December said their area was hiring, 43% said employees were being let go — by far the most negative conditions Gallup has found since it began tracking federal government job creation in August 2008.

The same research notes a drop in state and local jobs as well.

The layoffs among state and local workers spread throughout the recession as tax receipts fell. Some states have said budget deficit problems are beginning to improve a bit. That improvement is not enough to create jobs growth, though. Moves by some states to push unions of out the public worker negotiating process likely means that another round of layoffs in some is imminent.

Federal government austerity programs should bite sometime this year. How many people that will bleed from the federal job rolls will be hard to know until a budget deficit reduction plan is in place. But there will be cuts. Nearly 2.8 million people are on the federal payroll, and most work outside Washington. Firings will affect employment in most states.

The largest concern about the pace of the jobs recovery has been about whether people hired late last year will keep their jobs if the tax code is changed after March 1 and whether retail jobs added in the fourth quarter will become permanent. Those problems are not the most important ones. Employment in the public sector is.

Methodology: For Gallup Daily Tracking, Gallup interviews approximately 1,000 adults, aged 18 and older, each day. The Gallup Job Creation Index results are based on a random sample of approximately 550 current full-time and part-time employees each day.

Douglas A. McIntyre