Thursday, September 6, 2012
Initial claims and jobs: tomorrow's report should reveal the trend
- by New Deal democrat
Initial jobless claims averaged 371,000 per week in August. That's slightly higher than February, March, and July, but lower than every other month in the last 4 years. If this were six months ago, I would have estimated that the economy added about 250,000 jobs during the month. Not so ever since the hugely disappointing March payrolls report signalled a period of weakness.
Here's an update of the scattergraph of the monthly average of initial jobless claims (left scale) and the number of private jobs added that month (bottom scale) since jobless claims peaked in March 2009 during the recession. The last 5 months of relatively poor payroll reports are shown in red:
March and July, both of which averaged fewer layoffs than August, averaged 161,000 job growth, which has marked a break in the trend for the worse. April, May, and June, which featured higher jobless claims than August, averaged 125,000 jobs.
So, while there is a huge margin for error in any jobs report, and substantial revisions are common, where tomorrow's report lands will tell us a lot about the trend. A report closer to February's excellent number means that strength is re-asserting itself. A report between 100,000 and 200,000 will keep us in the subpar trend we have seen the last 5 months. A number under 100,000 puts us close to recessionary territory.
And the price of gasoline is rising. More on that later today.