Rise? Yes. Unexpectedly? Well … that depends on whether one relied on weekly jobless claims data for the first two weeks of the month. The past two reports showed a significant and unexpected drop in the Department of Labor’s measure, but today’s report returns the data series to its 18-month range:
In the week ending January 26, the advance figure for seasonally adjusted initial claims was 368,000, an increase of 38,000 from the previous week’s unrevised figure of 330,000. The 4-week moving average was 352,000, an increase of 250 from the previous week’s unrevised average of 351,750.
The advance seasonally adjusted insured unemployment rate was 2.5 percent for the week ending January 19, unchanged from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 19 was 3,197,000, an increase of 22,000 from the preceding week’s revised level of 3,175,000. The 4-week moving average was 3,192,250, a decrease of 9,750 from the preceding week’s revised average of 3,202,000.
There were a lot of raised eyebrows over the previous two reports and their “unexpected” drop into the 330K range. Unadjusted figures rose one of the two weeks, for instance, and the adjustments seemed rather sharp. Interestingly, unadjusted claims dropped in this report even while the adjusted number jumped by 38,000. However, the unadjusted figure for all claims (not new ones) in all programs rose in this report by 255,501.
The Associated Press reported on the sharp rise:
The number of Americans seeking unemployment aid rose sharply last week but remained at a level consistent with moderate hiring.
Weekly applications for unemployment benefits leapt 38,000 to a seasonally adjusted 368,000, the Labor Department said Thursday. The increase comes after applications plummeted in the previous two weeks to five-year lows.
The volatility reflects the government’s difficulty adjusting the data to account for layoffs after the holiday shopping season. Job cuts typically spike in the second week in January as retailers dismiss temporary employees hired for the winter holidays. Layoffs then fall in the second half of the month.
The department attempts to adjust for such fluctuations, but the January figures can still be volatile. The four-week average, a less volatile measure, ticked up to 352,000, just above a four-year low.
“Volatility” is probably the best explanation. This isn’t a data series that has low volatility on a week-by-week basis, which is why people rely more on the four-week rolling average. It’s also a bit difficult to use the weekly data as a correlation to overall hiring, although it is useful for softer analysis of job-market conditions.
Other economic data released today looked more positive, albeit related to December:
Personal income increased $352.4 billion, or 2.6 percent, and disposable personal income (DPI) increased $331.3 billion, or 2.7 percent, in December, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $22.6 billion, or 0.2 percent. In November, personal income increased $135.8 billion, or 1.0 percent, DPI increased $125.5 billion, or 1.0 percent, and PCE increased $41.6 billion, or 0.4 percent, based on revised estimates.
More directly related to tomorrow’s jobs report, Gallup anticipates a drop in the workforce but no drop in the jobless rate:
The U.S. Payroll to Population employment rate (P2P), as measured by Gallup, was 43.7 % for the month of January, a decline from 44.4% in December.
Gallup’s P2P metric is an estimate of the percentage of the U.S. adult population aged 18 and older who are employed full time by an employer for at least 30 hours per week. P2P is not seasonally adjusted.
These results are based on Gallup Daily tracking interviews, conducted by landline and cellphone Jan. 2-29, with more than 27,000 Americans. Gallup does not count adults who are self-employed, working part time, unemployed, or out of the workforce as payroll-employed in the P2P metric.
Because of seasonal fluctuations, year-over-year comparisons are helpful in determining how much of the monthly changes are because of seasonal hiring patterns and how much are the result of growth in permanent full-time positions. January’s P2P measure was nearly identical to the 43.6 measured in January 2012. This year-over-year comparison is an indication that the employment situation has changed little in the past year.
Let’s look at the expectations for tomorrow’s report, from the AP again:
On Friday, the government is scheduled to issue its January jobs report. Analysts forecast that it will show employers added 155,000 jobs, the same as in December. The unemployment rate is expected to remain at 7.8 percent for the third straight month.
That’s consistent with the number of people seeking unemployment aid. Applications fluctuated between 360,000 and 390,000 for most of last year. At the same time, employers added an average of 153,000 jobs a month.
I’d guess 135K and 7.8%, with perhaps a tenth-point loss in the civilian population participation rate, bringing us back down to the 31-year low 63.5% we had in August. What do readers believe the jobs number will be? Take the poll: