Thursday, February 3, 2022

Multi-decade lows in unemployment claims leading to a loss of January jobs? Doesn't add up

With tomorrow's jobs report looming and some on Wall Street expecting the first loss of jobs in the last 12 months, I think we need to take a look at what jobless claims have been doing. And if they're any indication, I think the numbers will be just fine.

Take a look at this note in the jobless claims report from today.
The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending January 22, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 22 was 1,628,000, a decrease of 44,000 from the previous week's revised level. The previous week's level was revised down by 3,000 from 1,675,000 to 1,672,000. The 4-week moving average was 1,619,750, a decrease of 31,250 from the previous week's revised average. This is the lowest level for this average since August 4, 1973 when it was 1,608,750. The previous week's average was revised down by 750 from 1,651,750 to 1,651,000.

So how are we losing jobs when we have the lowest number of people filing unemployment claims in 48 1/2 years? Did hiring completely slam shut last month? I'm doubtful.

Also remember that there are usually 3 million fewer people working in January than December because of seasonality, and that the jobs report takes that into account when figuring out how many jobs were "gained" or "lost" for the month.

Even the ADP report of 301,000 jobs lost for January needs to be taken with a serious grain of salt. That's because ADP said there was a huge gain of jobs in December that didn't bear out in the "regular" monthly jobs report from the Bureau of Labor Statistics.

Change in jobs, ADP Report
December 2021 +776,000
January 2022 -301,000
TOTAL +475,000

The ADP and BLS jobs report generally converge to similar totals over time. So if you take December's "disappointing" BLS report of 199,000 jobs, that would mean a gain of 276,000 jobs in January to equal the 2-month total in the ADP report.

I'm just throwing a dart here, but the numbers we've seen wouldn't indicate that tomorrow's big jobs report won't be the brutal number that some are expecting. But it also was surveyed at the height of omicron infections 3 weeks ago, so who really knows what this number will mean as a future or even current indicator.

1 comment:

  1. Sure enough, BLS says that January had a seasonally adjusted GAIN of 467,000 jobs, that November and December was revised higher while Summer was revised down(but still 500-600K growth for those months).

    The unemployment claims and reality that few places were actually shutting down were your clues. Add in that January's numbers assume seasonal layoffs,. and there you go.