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Today, new evidence that the pace of job growth is picking up. The government's employment report for December showed 200,000 jobs added to payrolls. The unemployment rate continued its downward trend falling to 8.5 percent.
And while that may be welcome news, as NPR's John Ydstie explains, the December report could be overstating job growth.
JOHN YDSTIE, BYLINE: Prior to the release of today's report, economists surveyed by news organizations expected an increase of only about 150,000 jobs. So the news of 200,000 new jobs was a pleasant surprise. Mark Zandi of Moody's Analytics says it's a signal of an uptick in economic growth.
MARK ZANDI: And we're going into 2012 with some momentum. So, it feels really good to get some solid job numbers.
YDSTIE: But some economists pointed to a big jump in the number of couriers and messengers in the December report. An increase of 42,000 in a job category that normally adds or subtracts no more than 1,000 jobs a month. Their view is that the 42,000 increase represents a seasonal boom in businesses like UPS and FedEx delivering holiday packages from Internet retailers.
Nariman Behravesh and his colleagues at IHS Global Insight believe it's likely December's big increase in those jobs will be followed by an offsetting decrease in January. That's what happened last year in this sector. Behravesh says despite the headline number in the December report, the trend in job growth really hasn't moved up to the 200,000 a month level.
NARIMAN BEHRAVESH: Our view right now is that the underlying number is around 150,000, and that's what we can probably expect in the coming months.
YDSTIE: However, an analyst at the Labor Department says its seasonal adjustments, which are updated regularly, should have smoothed out any seasonal hiring distortion. Mark Zandi of Moody's says he was actually more surprised by the drop in the unemployment rate to 8.5 percent than the bigger-than-expected jobs increase. Economists had thought that after a big decline in November, the unemployment rate might actually kick up again in December.
ZANDI: Very surprising. It's in part due to better job growth.
YDSTIE: But while that may be true, there are other factors that have pushed the unemployment rate down rapidly over the past four months. Most importantly, a decline in the size of the labor force. That's been caused partly by discouraged workers who've given up looking for jobs, but Zandi says it's also due to demographic changes, a smaller stream of immigrants coming into the U.S. looking for work and an aging population retiring.
ZANDI: Most recently, in the last few months and last year, most of the decline in labor force participation is among females and it's among college-educated white females.
YDSTIE: Zandi says, at the same time, the number of men in the workforce is growing.
ZANDI: Lots of different things going on here, I don't think there is a solid answer, at least I don't have one. Not yet.
YDSTIE: At an appearance today in Washington, President Obama wasn't asking why, he was just touting the job growth numbers over the past year.
PRESIDENT BARACK OBAMA: More private-sector jobs were created in 2011 than any year since 2005. There are a lot of people that are still...
(SOUNDBITE OF APPLAUSE)
YDSTIE: And now, many economists are suggesting the unemployment rate could be at 8 percent by election day. Nariman Behravesh says that still may not be enough to win a second term for Mr. Obama.
BEHRAVESH: I would say right now, the president has something of an uphill battle on the economy even if we see further progress on the unemployment rate.
YDSTIE: Behravesh bases his view on a model that measures the effect of unemployment rates on elections historically. It suggests unemployment would have to go well below 8 percent to not be a drag on the president's chances for a second term.
John Ydstie, NPR News, Washington.