Two key indicators on employment show a hint of moderate job growth for August 2012, one day ahead of the official report from the Bureau of Labor Statistics. First, weekly jobless claims dropped slightly to 365,000 last week, according to the Department of Labor:
In the week ending September 1, the advance figure for seasonally adjusted initial claims was 365,000, a decrease of 12,000 from the previous week’s revised figure of 377,000. The 4-week moving average was 371,250, an increase of 250 from the previous week’s revised average of 371,000.
The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending August 25, unchanged from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending August 25 was 3,322,000, a decrease of 6,000 from the preceding week’s revised level of 3,328,000. The 4-week moving average was 3,320,750, a decrease of 3,500 from the preceding week’s revised average of 3,324,250.
That’s still within the same 360-380K band we’ve seen from this series for the last 17 months. The one-week drop wasn’t enough to outweigh increases in the previous three weeks, which is why the rolling average edged up slightly. However, all of these changes are within the range of statistical noise. None of them indicate a serious move in any direction except continuation of the status quo.
Next, ADP released its projection of job growth in the private sector, which offers better news:
Employment in the U.S. nonfarm private business sector increased by 201,000 from July to August, on a seasonally adjusted basis. The estimated gain from June to July was revised up from the initial estimate of 163,000 to 173,000.
Employment in the private, service-providing sector expanded 185,000 in August, up from 156,000 in July. Employment in the private, goods-producing sector added 16,000 jobs in August. Manufacturing employment rose 3,000, following an increase of 6,000 in July.
Employment on large payrolls—those with 500 or more workers—increased 16,000 and employment on medium payrolls—those with 50 to 499 workers—rose 86,000 in August. Employment on small payrolls—those with up to 49 workers—rose 99,000 that same period. Of the 86,000 jobs created on medium- sized payrolls, 12,000 jobs were created by the goods producing sector and 74,000 jobs were created by the service-providing sector.
The problem with ADP is that it usually overshoots the mark significantly. The use of ADP works better as a trend indicator rather than as a precise predictor of BLS outcomes. Last month, however, the unadjusted number was identical to the overall addition of 163K jobs to the economy. This month, the ADP number is slightly higher, which means one has to determine whether to buy into the trend and expect something similar from tomorrow’s report, or whether to fall back to the ~60% figure that eliminates the normal overstatement from ADP.
At least one economist is going with the latter, according to CNBC:
Economists could ratchet up current expectations of 125,000 new jobs and an unchanged unemployment rate of 8.3 percent, though the jobs picture remains cloudy.
“We still have a long ways to go, and given our macro forecast for the rest of the year into next year I’m not expecting a further acceleration in the monthly employment gains,” Joel Prakken, chairman of Macroeconomic Advisors, told CNBC.
Prakken said the ADP number could suggest a “slight decline” in the jobless rate.
Wall Street had been expecting ADP to show about 145,000 new jobs.
However, the Gallup survey — which mirrors the same techniques as the BLS — comes to the opposite conclusion, expecting a slight tick upward in the jobless rate:
U.S. unemployment, as measured by Gallup without seasonal adjustment, is 8.1% for the month of August, down slightly from 8.3% measured in mid-August and 8.2% for the month of July. Gallup’s seasonally adjusted unemployment rate for August is also 8.1%, a slight uptick from 8.0% at the end of July. …
U.S. unemployment declined significantly during the first part of the year, but August marks the third straight month with little change in the unadjusted number. Gallup’s estimate of adjusted unemployment has increased by 0.3 percentage points since June. Despite the lackluster jobs growth, August’s 2012 unadjusted and adjusted unemployment are each more than a full point lower than they were in August 2011.
Underemployment, as measured without seasonal adjustment, was 17.1% in August, unchanged from the end of July but significantly improved from 18.5% a year ago. Gallup’s U.S. underemployment measure combines the percentage who are unemployed with the percentage of those working part time but looking for full-time work. Gallup does not apply a seasonal adjustment to underemployment. Demographic breakouts of Gallup’s U.S. unemployment and underemployment numbers for August are found on page 2.
Two weeks ago, Gallup was seeing an uptick in unemployment, which may have smoothed out as the back-to-school season approached. We’ll see soon enough.
Let’s offer the same poll on job additions in tomorrow’s report that we’ve used the last few months. I’ll predict an addition of 121,000 jobs, with the jobless rate remaining 8.3%. What do you think tomorrow’s job additions will be?