US economy defies Fiscal Cliff, creates plenty of IT services jobs

Computer manufacturing hits the skids a bit

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The US federal government's budget crisis at the end of 2012 did mess with America's economy and the jobs market in particular. But according to the latest employment report from the Department of Labor, companies were a tad more resilient in the face of the Fiscal Cliff than many had expected.

As El Reg reported a month ago, the January report from the Bureau of Labor Statistics (BLS) was better than some had expected. As it turns out, the BLS was overly optimistic in its estimates for net job growth in January.

According to the February report released this morning [PDF], companies and governments in the United States only added 119,000 new jobs in January, revised downward from the 157,000 the BLS originally thought were created. That's the bad news. The good news (at least until a potential revision a month from now) is that the BLS thinks the US economy added 236,000 workers in February.

Those numbers are culled from the monthly polls that the BLS carries out with employers, which does not include farmers because they have seasonal workers and, frankly, a lot of real farmers (not the corporate farm operators) have "real" jobs because they can't make ends meet farming. The non-farm employment figures include all of those working at private-sector companies as well as local, state, and federal governments. This is called the establishment survey by the BLS.

The unemployment rate is calculated through the BLS household survey, which polls households in the US to see who is working, who is looking for work, and who has stopped looking for work because they can't find a job. The unemployment rate does not include the latter group as far as Uncle Sam is concerned because telling people that the unemployment rate is really something on the order of maybe 15 per cent would freak everyone out. In America, you have to be looking for a job to count as unemployed.

The unemployment rate ticked down a bit in February

The unemployment rate ticked down a bit in February

Based on the household survey data, the unemployment rate dropped two-tenths of a point to 7.7 per cent in February, continuing the general downward trend. At this rate, if current trends persist, the unemployment rate in the US will hit 6.5 per cent around the end of 2014 or so, and this is significant for one very important reason.

That is the level of unemployment that Federal Reserve chairman Ben Bernanke says the US economy has to hit before he will take his foot off the pedal that controls the printing presses that are pumping liquidity into the financial markets through quantitative easing. Until that point, Bernanke has said he will keep interest rates low. This is great news if you are borrowing money, not so good if you are trying to live off interest income on your savings.

Averaged across the past three months, the US economy added 195,000 jobs per month, which is very nearly the rate necessary to keep up with population growth. In addition to lowering the January job count, the BLS raised the December 2012 numbers to 219,000 from 196,000.

The Fiscal Cliff hit January harder than expected, but if the February numbers hold, then the economy bounced back pretty fast. We'll see over the next two months as BLS revises its numbers – or doesn't. Incidentally, private sector companies actually added 246,000 net new works and governments shed 10,000 last month.

January was not as good in terms of job creation as originally expected

January was not as good in terms of job creation as originally expected

Across the US economy, the healthcare sector continued to add workers: 32,000 new people were added to the payrolls; the construction industry is trying to recover from the burst housing bubble, and added 48,000 workers. The motion picture and recording industries added 20,000 workers in February, so hopefully we will get some decent music and movies. Retailers added 24,000 workers and have defied the normal pattern of slashing jobs after the holiday season has passed.

Drilling down into the raw data from the BLS report, we can get a proxy of sort for the IT sector, and admittedly it is not a very good one. The BLS gathers data by industry, not by job title, and that is not necessarily useful unless you are an industry lobbyist.

What would be more useful is to know how many programmers, system administrators, CIOs, database architects, and so on are employed each month across the land. Armed with such data, you could see average salaries by job type and how those jobs have changed over time. You might even be able to plan a career, or maintain one by moving to higher ground.

But alas, thus far the BLS has not applied common sense to its data gathering and is stuck in the mindset of the bureaucrats in the years immediately following the boom-boom years of the Roaring 1920s who were gathering information to try to get out of the Great Depression.

According to the BLS, there were more than 1.1 million people employed in manufacturing computer and electronic products in the United States in February, and the number was down 300 from January. Mere noise in the data, unless you happen to be one of the hundreds getting pink slips. Within this group, computer and peripheral equipment makers accounted for 159,600 workers, up 400 people, and communications equipment makers accounted for 107,600 workers, down 200. Semiconductor and electronic component makers had 380,500 people on the payrolls as February came to an end, down 500.

Within the information industry, which includes all kinds of media, the data processing and hosting sector added 400 employees for a labor pool of 251,000.

And in the professional and business services sector, companies engaged in computer systems design and related services added 10,800 workers, to a pool of 1.66 million people. This category of company has added 80,700 workers in the past year, so the trend is good, but the swings up and down can be severe depending on how IT projects vacillate in the economy. ®

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