Kentucky’s seasonally adjusted preliminary unemployment rate for January 2016 rose to 5.8 percent from a revised 5.7 percent in December 2015, according to the Office of Employment and Training (OET), an agency of the Kentucky Education and Workforce Development Cabinet.
The preliminary January 2016 jobless rate was 0.5 percentage points above the 5.3 percent rate recorded for the state in January 2015.
The U.S. seasonally adjusted jobless rate for January 2016 dropped to 4.9 percent compared to 5 percent in December 2015, according to the U.S. Department of Labor.
Labor force statistics, including the unemployment rate, are based on estimates from the Current Population Survey of households. It is designed to measure trends rather than to count the actual number of people working. It includes jobs in agriculture and those classified as self-employed.
In January 2016, Kentucky’s civilian labor force was 1,963,034, an increase of 10,300 individuals compared to the previous month. Employment was up by 8,226, and the number of unemployed increased by 2,074.
“The January employment statistics are released at the same time as the annual revision which realigns labor force data for all states to conform to the U.S. Census. The realigned — or benchmarked data — has resulted in an upward revision of Kentucky’s unemployment rate for the past 12 months,” said economist Manoj Shanker of the OET.
“An improvement in the economy is a signal to potential workers that jobs are available. When new workers enter the labor market the labor force expands. Since it takes time for the new workers to find suitable employment, there is an adjustment period when unemployment rates shoot up, as the new entrants are slowly absorbed in the labor market,” he said.
In a separate federal survey of business establishments that excludes jobs in agriculture and people who are self-employed, Kentucky’s seasonally adjusted nonfarm employment decreased by 5,100 jobs in January 2016 from the month before, but increased by 26,100 positions since January 2015.
“The month-to-month decline in January, especially in manufacturing, is being driven by statistical factors, and not by actual jobs data. In the past, factories closed for a week or more during December. However, consumer demand for durable goods, especially cars and trucks, has changed the shutdown pattern,” said Shanker. “A fairer comparison this time around would be to compare job growth on a year-over-year basis. For the last 12 months Kentucky has added an average of 26,100 jobs on a year-over-year basis.”
Nonfarm data is provided by the Bureau of Labor Statistics’ Current Employment Statistics program. According to this survey, three of Kentucky’s 11 major nonfarm North American Industry Classification System (NAICS) job sectors registered gains in employment, while eight declined.
Kentucky’s trade, transportation, and utilities sector gained 5,000 jobs in January 2016 from a month ago, and an increase of 11,000 jobs from a year ago. This is the largest sector in Kentucky accounting for one-fifth of all nonfarm jobs. More than half of these jobs are in the retail trade sector which had a net gain in employment for the year. The rest of the jobs are in wholesale and warehousing.
“All aspects of trade—wholesale, retail and drop-shipped warehouse sales—performed strongly in response to an increase in consumer spending. Discretionary spending has been boosted by low energy costs and a relatively mild winter,” said Shanker.
Employment in the educational and health services sector posted a gain of 200 positions in January 2016, and an overall increase of 8,000 jobs from a year ago. Health care jobs, which account for nearly 90 percent of employment in this sector, expanded by 7,700 positions over the year.
The financial activities sector employment rose by 100 jobs in January 2016. The sector has expanded by 3.3 percent during the last 12-months with the addition of 3,000 jobs.
Employment in the mining and logging sector decreased by 100 positions in January 2016 from a month ago. There was a sharp decline of 2,600 jobs, or almost 17 percent, from a year ago.
“The economics of the energy industry has changed rapidly from the availability of cheap natural gas and shale oil. It has effectively wiped out one in every five mining jobs in Kentucky over the last 12 months,” said Shanker.
The government sector, which includes public education, public administration agencies and state-owned hospitals, declined by 300 jobs in January 2016. The sector posted a dropped of 4,800 jobs compared to January 2015.
Employment in the other services sector, which includes repairs and maintenance, personal care services, and religious organizations, fell by 800 positions in January 2016 from a month ago. This sector decreased by 1,000 jobs from a year ago.
The information sector went down by 900 jobs in January 2016 from a month ago and by 1,200 positions from a year ago. The industries in this sector include traditional publishing as well as software publishing; motion pictures and broadcasting; and telecommunications.
Kentucky’s manufacturing sector lost 1,100 jobs in January 2016 compared to the previous month. Since January 2015, employment in manufacturing has increased by 4,700. The year-to-year expansion has been largely driven by the durable goods subsector which includes consumer goods as well as machinery.
“The decline in employment from December 2015 to January 2016 seems to be temporary, and is largely driven by seasonal adjustment factors and not by any intrinsic change in the manufacturing sector,” said Shanker.
The construction sector dropped by 2,100 jobs in January 2016 from a month ago. Since January 2015, construction jobs have grown by 800 positions.
Kentucky’s leisure and hospitality sector lost 2,300 jobs in January 2016 from a month ago. Since January last year, however, the sector has added 1,000 jobs. This sector includes arts, entertainment, recreation, accommodation, and food services.
Kentucky’s professional and business services decreased by 2,800 positions in January 2016 from a month ago. Year-over-year, there was a substantial gain of 7,200 jobs. This category includes establishments engaged in services that support the day-to-day activities of other organizations, including temporary employment services and payroll processing.
“The month-to-month decline was in the administration and support services, while professional services and management employment posted increases. But on a year ago basis, both areas had robust growth,” Manoj said.
Civilian labor force statistics include nonmilitary workers and unemployed Kentuckians who are actively seeking work. They do not include unemployed Kentuckians who have not looked for employment within the past four weeks.
Kentucky’s statewide unemployment rate and employment levels are seasonally adjusted. Employment statistics undergo sharp fluctuations due to seasonal events, such as weather changes, harvests, holidays and school openings and closings. Seasonal adjustments eliminate these influences and make it easier to observe statistical trends. However, because of the small sample size, county unemployment rates are not seasonally adjusted.