After making virtually no improvement for most of last year, Michigan’s jobless rate dropped by a half percentage point during January. The encouraging decline brought the state unemployment rate to its lowest level since May 2008, and bolsters economic forecasts that show employment getting better throughout the rest of the year.
According to the Michigan Department of Technology, Management & Budget, unemployment fell from 8.3 percent in December to 7.8 percent in January. Overall employment increased by 32,000 jobs, while 20,000 workers left the ranks of the unemployed.
The state labor force — the total number of men and women who either have a job or want one — also increased, gaining 11,000 for the month. The labor force gain indicates that the unemployment rate improved because more people found work, and not because they gave up on trying to find a job in the state.
Compared to the same month in 2013, January had 52,000 more people with jobs, 50,000 less looking for work, and added just 2,000 workers to the labor force, which suggests that it is mostly jobless men and women getting hired that has lowered the unemployment rate from 8.9 percent in January 2013 to the current 8.3 percent.
The unemployment doldrums in Michigan stretch back to the beginning of 2012, when the jobless rate fell to 9.2 percent after dropping from double-digits just a few months before. But until October, the rate was nearly flat, ping-ponging around 9 percent, never moving by more than a tenth of a point or two. Since October, the rate has dropped by eight-tenths of a point and has posted five straight months of declines.
“We’ll need a few more months of data to see if this rate stays below 9 percent,” said Bruce Weaver, economic analyst with the Michigan Department of Technology, Management & Budget. “If it does, that’s pretty important.”
In a statement, Gov. Rick Snyder added, “Today’s announcement is further evidence that we are the comeback state.”
The encouraging jobs trend reinforces economic forecasts that see the state jobless rate dropping further this year and next. On Tuesday, PNC Bank Chief Economist Stuart Hoffman said he sees Michigan unemployment getting close to 7 percent by the end of this year, and between 6.5 percent and 7 percent by the end of 2015.
In November, the University of Michigan’s Research Seminar in Quantitative Economics issued a forecast that sees Michigan adding 130,000 more jobs by the end of 2015. The expected job growth would drop Michigan’s unemployment rate from its current 9 percent to 7.9 percent at the end of next year, and 7 percent at the end of 2015, said George Fulton, director of the U-M economic forecast.
That would put the state back where it was just before the Great Recession, but would still be at least 1 point worse than the U.S. national average, and well above the 5 percent level that economists consider to be full employment.
While several economic trends support a more optimistic view, Weaver, the economic analyst noted, “Time will tell whether this rate below 8 percent can be sustained.”
Source: MEDC
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