On Friday morning, we'll get the first government jobs report for 2011. When January's numbers are announced, it could very well set the tone for the year. If hiring is clearly more aggressive than what Americans were hearing in 2010, then optimism may rise. If it's very weak, or even lower than we have been used to hearing, then optimism could fall. So how will the number look? Let's consider the other reports we've seen so far this week.
This morning, the Labor Department reported that initial unemployment claims fell by 42,000 to 415,000, for the week ending January 29th. Continuing claims also fell, 84,000 to 3.925 million, for the week ending January 22nd. Looking at January's average, however, doesn't provide the best news. Initial claims rose 16,900 from December, averaging 430,500 for January. Yet average continuing claims fell 136,533. So the data here is a little bit mixed. The longer-term trend could mean fewer unemployed, but it could also imply that benefits are simply running out for many Americans who have been jobless for an extended period.
According to payroll specialist ADP, jobs grew significantly in January, up 187,000. That's after it says 247,000 jobs were created in December. So January's job growth would have been weaker, but not quite anemic. There are two things to note about ADP's estimates, however. First, it only counts private sector hiring. Since it's plausible that some government jobs were shed due to budget cuts, this report could exaggerate the total jobs added.
Second, ADP's jobs number has been far outpacing the government jobs report recently. Last month, ADP said 92,000 jobs were created in November, but the Bureau of Labor Statistics only recorded 71,000. For December the difference was even bigger. ADP initially reported 297,000 new jobs, while the government's first estimate was just 103,000. So we should probably take ADP's assertions with a grain of salt.
Challenger, Gray, and Christmas, Inc. provides (.pdf) somewhat mixed news for January. It says planned job cuts totaled 38,519. This is the fewest cuts in any January since the firm started keeping records in 1993. Yet that number of layoffs is 20% higher than what Challenger estimated for December. Of course, December's number was the smallest of any month since the year 2000. So its verdict for January was still relatively good, just not truly spectacular.
As we've seen over the past year, Friday's big jobs report is mostly an enigma. There's little reason to assume that the number of jobs added will be shockingly large, but it's also unlikely that there were many jobs lost. If anything, we're likely to see another small change.
But one thing you can also expect is the economic commentators to blame the weather if the news isn't great. That's silly, however. Although a small number of jobs may have been delayed due to snow, it's not likely the root cause of a bad report. The weather is generally ugly in January; only some regions were affected; and most cities recovered in a few days. So if tomorrow's report is bad, it's more indicative of the labor market's recovery continuing to move at a crawl.