The Labor Department’s final employment report for 2010 is out and, as expected, December capped the painfully slow but somewhat encouraging turnaround the labor market has seen throughout 2010. Unemployment has fallen to 9.4%, its lowest level since July 2009, with initial unemployment claims also at a 1.5 year low. Overall, unemployment is down 0.4 percent for the year while unemployment claims have fallen 11.5 percent.
The below graph shows the 2010 trends in both variables – both have experienced a long, gradual trend down from peak unemployment in Dec. 2009.
Though many of the unemployed have simply exited the labor force, (the labor force participation rate is at its lowest level since the early ’80s) many have been caught up by a rising tide of private sector job growth. Much of that hiring, on a proportional basis, has been centered in services, with manufacturing peeking over its 2009 levels for the first time in September.
By comparison, the steady growth in government jobs seen during the recession has petered out as stimulus money for states runs dry. Construction employment, hit hard by persistently weak home prices, reached rock bottom in Jan. 2010, but recovered somewhat and ended up 2 percent under the previous year’s total by December. Manufacturing, another “stimulated” sector, added jobs throughout the year and finally exceeded the previous year’s mark by September.
Though the labor market has, in general, improved from its late 2009/early 2010 doldrums, there are many more danger signs, e.g. slow business lending, that could keep employment growth slow in 2011. Keep your eyes peeled for more coverage from Reason Foundation on this issue in coming months.