Concerns began to play out in May, as several significant economic activity surveys, including the important Philadelphia and New York Fed surveys, showed a sharp decline in underlying economic growth. In addition, weekly claims for unemployment benefits have climbed significantly, a disturbing trend as it could eventually impact hiring.
April private payrolls expected up 170,000; Labor-force participation rate at multi-decade low; Unemployment rate expected to rise to 9.0% A meaningful correlation exists between the ADP Private Payrolls report and the Bureau of Labor Statistics monthly Employment Situation Report. I have used data from the past 5 years reports to develop a prediction for tomorrow’s […]
Economic data in December, January and February suggested that the economic recovery was consolidating its momentum. Data have turned slightly more mixed in March, as major natural disasters in New Zealand and Japan, and war in Libya have sapped consumer confidence and caused a sharp spike in energy prices. In the meantime, US manufacturing data have showed continued growth and a healthy manufacturing environment, suggesting that employers may be hiring for those positions again.
The official unemployment rate fell sharply in January, declining from 9.4% to 9.0%. This was primarily precipitated by an exodus of workers, but also by a substantial increase in households reporting working status. I believe that this may have been caused by temporary fluctuations in survey results. It is likely that this may have reverted in February, which should result in a rise in the unemployment rate, likely to 9.2%.
While the unemployment rate fell in December, its fall was principally driven by the exit of over 500,000 job seekers from the labor force. I believe a substantial number of these workers will return to their search, thus increasing the unemployment rate to 9.7%.
Recently,economic information has shown a substantial trend towards improvement. Retail sales, business climate, manufacturing climate and factory orders have all shown some improvement in December. The only components of the economy that haven’t turned better lately appear to be housing and employment, two categories that are tied closely to each other. Home prices won’t rebound until employment levels improve, meaning that improvements in the employment situation must come first.
It appears that labor markets may not be as strong as recent data have suggested. The Bureau of Labor Statistics’ Employment Situation Report was released this morning, showing a mere 39,000 jobs added in November, far below our estimate of 210,000 and other analysts average estimates of 130,000. A surprising drag on total employment was the retail sector. While expansion in that sector would ordinarily be expected at this time of the year, retail employment actually fell 28,100 in the month.
Recent trends in the ADP report, and recent economic data, suggest that Private Employers added 225,000 net jobs in November. Total job creation is expected to be 210,000 jobs, as governments continue to cut employment. The unemployment rate is expected to hold stable at 9.6%, but may come under pressure in the near future as discouraged workers begin returning to the labor force.
The ADP Private Payrolls report was believed to be most closely correlated to the Private Employment component of the Employment Situation report. Analyzing the data, substantial correlation was found, with a coefficient of correlation over 0.86. This indicates that the relationship believed to exist between the two surveys is present. Correlation analysis was also performed on the relationship between ADP and Total Payrolls.
95,000 Jobs Lost on Government Cuts, Private Employers Add 64,000 – Daily Mortgage Rate Update for October 8th, 2010
The Bureau of Labor Statistics reported this morning that the US Economy shed 95,000 jobs in September. This result missed average economist estimates for a loss of only 5,000 jobs, and was largely driven by a substantial increase in government layoffs. In addition to 77,000 temporary Census workers whose positions ended, 76,000 positions were cut by state and local governments struggling to balance budgets in the aftermath of the economic crisis. These cuts far outweighed the 64,000 jobs added by private employers in September.