Non-farms payrolls expected up 90,000; Unemployment rate believed steady at 9.2%; Weak GDP growth seen as a major obstacle 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 […]
The official unemployment rate rose to 9.1% in May, as, in spite of meaningful increases in employed residents, even more previously discouraged workers returned to the labor force. I believe that the opposite effect will be seen in June, as the volume of negative news likely caused more workers to give up their searches. Due to this decrease in the labor force, the unemployment rate is expected to decrease to 8.9%.
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.
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.
Non-farm employers added 151,000 positions in October, a substantial jump from declines previously announced for August and September. Gains were strongest among private, non-government employers who added 159,000 positions. This sector has been viewed as key to moving employment in the economy forward. Government is unlikely to increase its hiring any time soon, especially with the potential for gridlock between Capitol Hill and the White House.
The long-awaited Federal Reserve Open Markets Committee meeting concluded yesterday, and the worst-kept secret in financial markets was revealed. The Fed views the economy as growing insufficiently quickly to correct its biggest problem – unemployment. It’s action? Over the next 9 months, the Fed has committed to purchase $600 billion in medium term Treasury securities.
Private Employers Surprise Markets, Add 67,000 Jobs in July – Daily Mortgage Rate Update for September 3rd, 2010
The unemployment rate ticked upward slightly to 9.6%. This rate, which tracks the number of workers who have actively sought work in the past 4 weeks, compared with the total of that figure plus those who have held a job in that time frame, has been steady in the 9.5-9.7% range for several months. The increase this month over last month’s 9.5% is largely attributed to a number of previously discouraged workers, that is, workers who had given up on looking for work, returning to their search.