Will the Jobs Report for February Provide Clarity on Hiring?
Last month, we got one of the strangest unemployment reports to date. The government's two surveys for measuring the labor market diverged widely. One claimed that just 36,000 jobs were added to the economy, while the other said 589,000 jobs were created. The latter survey also pushed down the official unemployment rate down to 9.0% from 9.4% in January. Tomorrow, the report for February could help to clear up some of the confusion. For now, however, let's see if the other labor market reports that came out this week provide any hints.
First, initial jobless claims announced today for the week ending February 26th declined by 20,000 to 368,000, according to the Labor Department. That's the lowest number since May 2008. Continuing claims for the prior week also declined, by 59,000 to 3,774,000 -- the fewest since October 2008. In terms of the change for the four week averages from January to February, initial claims fell by 43,000 to 388,500. The change for continuing claims was even greater, declining by 89,667 (for February, just three weeks were taken into account, as the data for this statistic is not available for the week ending Feb. 26). Declining claims do appear to imply that more people are getting jobs. This could be due in part to some Americans' benefits running out, however.
The report from ADP (.pdf) also shows continued improvement. It says that 217,000 jobs were added to the private sector in February. That's the second best result, after it's tally for December of 247,000, since the recovery began last year. It's also slightly higher than the 189,000 it recorded for January. Of course, the Bureau of Labor Statistics only indicated 50,000 private sector jobs added that month, so the divergence between ADP and the BLS could continue.
Next, there's the Challenger, Gray & Christmas report (.pdf). It doesn't provide good news. The report says planned job cuts rose to 50,702 in February -- the most since March 2010. This also marks the second straight month of rising planned layoffs, according to the firm. A big chunk of February's layoffs came from government and non-profit employers, which reported 16,380 planned cuts -- up 154% from January. If firings are increasing, then they will make it more difficult for the economy to add net new jobs.
Finally, Gallup also preforms a survey on unemployment. Although its report does not contain a jobs number, it does provide an unemployment rate. Its rate, which differs from the official BLS rate, rose to 10.3% in February, from 9.8% in January. It should be noted, however, that Gallup's rate is not seasonally-adjusted.
Unfortunately, these reports don't provide anything near a consensus on what's happening in the labor market. That should make tomorrow's unemployment report another that fails to clarify hiring trends. It could very well be a reverse of what we saw in January, if one survey overshot the jobs number and the other undershot. That would imply that the rate could rise but the number of jobs created would look a little better than the 36,000 reported for January. We'll know soon enough.