Unemployment – Jobs. Trends. Insight.

WSJ Job Loss Forecast Slightly Better – Unemployment Rate Forecast Remains Bleak

By Juli Morris on July 14, 2009 in Labor Market Dynamics.

Economists surveyed by the Wall Street Journal in July predict that the U.S. economy will lose an average of 70,000 jobs per month over the next twelve months, less than the 86,000 average monthly losses they forecast in June. This is the fourth consecutive survey predicting declining monthly losses. Despite the declining losses, the outlook for the unemployment rate looks increasingly dire:

On average, the economists forecast an unemployment rate of at least 10% through next June, with a decline to 9.5% by December 2010. "The mother of all jobless recoveries is coming down the pike," said Allen Sinai of Decision Economics. But he doesn't favor more stimulus now, saying "lags in monetary and fiscal policy actions" should be allowed to "work through the system."

This month's Wall Street Journal survey of economists, conducted July 2-7, reveals that economists' view of the employment outlook has again improved over the past month. Each month the WSJ asks economists to estimate the average monthly change in nonfarm payrolls over the next twelve months. That is, the monthly changes the BLS reports each month, for the next twelve months, divided by twelve.

Unexpected Drop in New UI Claims – Continued Claims Increase

By Charles Thibault on July 9, 2009 in Unemployment Insurance Claims.

The Department of Labor released its weekly unemployment insurance claims data, which corroborates our analysis that despite some slippage, the labor market situation has stabilized and is in a position to start improving.

On a seasonally unadjusted basis:

- New Claims increased by 17,612 as Hiring Demand dropped by 16.3% or 122,700 new job ads.

- On a seasonally unadjusted basis, Continued Claims dropped by 34,900 claimants.

However, on a seasonally adjusted basis:

- New Claims dropped by a staggering 52,000 claimants.

- The four-week moving average of New Claims dropped by 10,000 claimants to 606,000.

- Continued Claims increased by 159,000 claimants.

The interpretation of this week's data is well tied together by the Associated Press: "While layoffs are slowing, unemployed workers are having a difficult time finding new jobs." A robust month of May may have helped reduce new claims, but recent slippage in Hiring Demand means that unemployment workers will find it harder to exit UI programs.

The following graph shows the historical relationship between UI claims and WANTED Hiring Demand. The UI Claims axis has been inverted to facilitate analysis.

Click chart to view full size

Weekly UI Claims: – "Recovery, Where are You? … Come in Please."

By Charles Thibault on July 2, 2009 in Unemployment Insurance Claims.

The Department of Labor reported this morning that initial jobless claims dropped by 16,000 on a seasonally adjusted basis. The 4-week moving average dropped 2,750, a very modest improvement. Combined with flat Hiring Demand, and another large reduction in the overall US workforce (-467,000 in Nonfarm Payroll Employment), we're still looking for a significant turning point in the economy (increases in employment or output).

On a seasonally unadjusted basis, initial jobless claims dropped by almost 12,000. This is matched with last week's 16,800 increase in Hiring Demand. This week, Hiring Demand went down by 7,000 on a seasonally unadjusted basis.

Click chart to view full size

Overall, slight upward trending in Hiring Demand corresponds with fewer initial jobless claims and reductions in the rate of employment loss. However, sustained employment losses continue to point towards a weak labor market and weakening overall economy, although "the worst is behind us".

BLS Update: Post Mortem

By Juli Morris on July 2, 2009 in BLS Nonfarm Employment.

Employment fell by 467,000 jobs in June, according to today's preliminary report from the Bureau of Labor Statistics. June's job losses were significantly higher than the 345,000 loss reported for May, a number than many questioned. The economy has now shed nearly 6.5 million jobs since the start of the recession in December 2007.

Click chart to view full size

The WANTED forecast of a loss of -260,000 jobs in June was clearly not pessimistic enough. This is the second month in a row when our forecast based on Hiring Demand missed the number released by the BLS by a larger than acceptable margin.

That range of error prompts us here internally to re-examine the model we use to see if it needs re-calibration. The Hiring Demand data has only been in use for the last five months, so there are likely some refinements still required. Our thinking at the moment is as follows:

The number that the BLS reported for May, which surprised everyone, still looks like an anomaly. We don't want to say that number is "wrong", but it certainly falls outside the trend (the blue line in the chart) established by the prior months. Our model happens to rely heavily on the prior month data, so this particularly unusual May data point had a disproportionate effect on our forecast for June.
We think we have some additional analysis to perform on the seasonal adjustments to our Hiring Demand data. These adjustments should be reflected in our forecast next month.

Along with the preliminary report for June, the BLS issued its Final Estimate of job losses for April at a loss of 519,000 jobs, down 15,000 from its revised estimate of -504,000. It also revised its May preliminary estimate up 23,000 jobs to a estimated loss of 322,000 jobs. One more revision for May could still occur.

Looking at industry employment figures, health care employment grew by 20,800 in June. Employment in transportation and warehousing declined by 13,900 in June, and the finance and insurance sector lost 18,200 jobs.

The unemployment rate rose from 9.4 to 9.5 percent—the highest rate seen since August 1983 —and slightly lower than the Bloomberg Survey estimate of 9.6 percent.

UI Claims Jump and Hiring Demand Wobbles

By Juli Morris on June 25, 2009 in Unemployment Insurance Claims.

Click chart to view full size

This morning the Department of Labor announced that new unemployment claims increased on a seasonally adjusted basis, jumping to 627,000 new claims last week, an unexpected increase from the revised 612,000 new claims from the prior week. The 4-week moving average of seasonally adjusted new unemployment claims rose slightly, increasing by 500 new claims from a revised average the prior week of 616,750.

Hiring Demand fell in the past week for the second consecutive week, following an uptick the week of June 6th. The number of new job ads, on a seasonally unadjusted basis, fell from 718,000 to 713,000. Overall, the trend in Hiring Demand in 2009 remains flat.

Combined with the monthly Nonfarm Employment Payrolls, UI and Hiring Demand data suggest that the labor market is not picking up any significant steam, although it appears to have stabilized. The economy continues to struggle, but the rate at which companies are reducing their workforces has slowed.

UI Claims Data and Hiring Demand Point to Stabilization

By Charles Thibault on June 18, 2009 in Unemployment Insurance Claims.

Click chart to view full size

The Department of Labor announced this morning that new unemployment claims increased slightly on a seasonally adjusted basis, moving from 605,000 new claims two weeks ago to 608,000 new claims last week. The 4-week moving average of seasonally adjusted new unemployment claims, however, has come down for the second week in a row, and for the 8th time since reaching its maximum ten weeks ago. The 4-week moving average fell by 7,000 new claims from 622,750.

Hiring Demand has not significantly picked up in the past week. The number of new job ads, on a seasonally unadjusted basis, fell from 746,000 to 696,000.

Combined with the monthly Nonfarm Employment Payrolls, UI data suggest that, even though the labor market is not picking up any significant steam, declines have subsided. The economy is still struggling, but the rate at which companies are reducing their workforces has been toned down.

UI Claims and Hiring Demand Remain Stable

By Charles Thibault on June 11, 2009 in Unemployment Insurance Claims.

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The morning the Department of Labor announced a slight decrease in the 4-week moving average of unemployment insurance claims. In each of the past five recessions, the recovery period, as identified by The National Bureau of Economic Research, started eight weeks after the peak in UI claims. The decrease in the 4-week moving average, the stabilization in hiring demand data, and last week's lower-than-expected report of job losses by the BLS suggest a slight improvement in the economic situation in relative terms.

Hiring Demand bounced back following the Memorial Day slowdown – the number of new ads posted increased by 43,000 to 733,000, an increase of 6.3%. However, this bounce is less pronounced than the 10% jump typically experienced the week after Memorial Day.

BLS Reports Jobless Rates of at Least 15% in 13 Metro Areas in April, 5 Fewer than in March

By Juli Morris on June 5, 2009 in Labor Market Dynamics.

For the fourth consecutive month, unemployment rates in all 372 metropolitan areas were higher on a year-over-year basis, according to Wednesday's BLS Metropolitan Area Employment and Unemployment Summary for April.

Only one metro area, El Centro, CA, reported a jobless rate over 15% in April '08, compared to the 13 identified in April '09. Six metro areas (including three in California) dropped below the 15% level in April from last month's report, while one area, Longview, WA, was added to that list.

Source: WANTED Analytics

However, the magnitude of the increase in unemployment rates does not engender optimism for a reduction in unemployment in 2009: 80 of the 372 metro areas reported an increase of at least 5 percentage points over April '08. The largest jobless rate increase, unfortunately, again belongs to Elkhart-Goshen, Indiana. Residents there saw an increase in their unemployment rate of 12.7%.

WANTED's hiring demand data for those 13 metro areas with at least 15% unemployment as of the week of May 24, 2009 shows a decline in online job ads of 33% from the same period in 2008.

Preliminary report from BLS shows decline of 345,000 jobs in May (Update 2)

By Juli Morris on June 5, 2009 in BLS Nonfarm Employment.

Employment fell by 345,000 jobs in May, according to today's preliminary report from the Bureau of Labor Statistics. May's job losses were the smallest since September 2008 and significantly lower than most economists' estimates. Although the losses are large in historical terms, the levels continue to lend support to the argument that the employment situation appears to have stabilized. The economy has now shed 6.0 million jobs since the start of the recession in December 2007.

Click chart to view full size

Along with the preliminary report for May, the BLS issued its Final Estimate of job losses for March at a loss of 652,000 jobs, up 47,000 from its revised estimate of -699,000. It also revised its April preliminary estimate up 35,000 jobs to a estimated loss of 504,000 jobs. One more revision for April may still occur.

Looking at industry employment figures, health care employment grew by 23,500 in May. Employment in transportation and warehousing declined by 14,500 in May, and the finance and insurance sector lost 19,300 jobs.

The unemployment rate rose from 8.9 to 9.4 percent—topping 9 percent for the first time in over 25 years—and higher than the Bloomberg Survey estimate of 9.2%.

No Signs of Recovery in UI Claims or Hiring Demand

By Charles Thibault on June 4, 2009 in Unemployment Insurance Claims.

Click chart to view full size

The Department of Labor announced this morning a slight increase in the 4-week moving average of unemployment insurance claims. In each of the past five recessions, the recovery period, as identified by The National Bureau of Economic Research, started eight weeks after the peak in UI claims. This morning's announcement confirms the generally acknowledged posture of the US labor market and economy as a whole – the economy is still shrinking at a stable pace as analysts are watchful for the first signs of an uptick.

On a seasonally unadjusted basis, the number of new UI claims fell by about 42,000. This is mostly explained by the 4-day week caused by Memorial Day. Correspondingly, the number of new job ads fell by 100,000 from 741,000 last week. HR departments post fewer jobs when they're in the office four days instead of five.

As discussed last week, we expect a jump of 10% in new job ads the first week of June. A jump of less than 64,000 new job ads would suggest that new UI claims would increase, again, on a seasonally adjusted basis.

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