The March 2012 seasonally adjusted unemployment number, published on April 6 by the Bureau of Labor Statistics (BLS) as 8.2 percent, is 0.1 percent lower than February. This is disappointing, not because it barely changed from the prior month, but more so because the BLS is still underreporting the unemployment numbers.
What we see in black and white are the numbers of those that still draw unemployment compensation. Nothing is actually said about all those who have fallen by the wayside because they no longer are eligible for unemployment compensation.
The BLS does publish a table that is called “Alternative measures of labor underutilization,” which includes six different unemployment categories, U-1 to U-6, and provides two types of figures, not seasonally adjusted and seasonally adjusted. The seasonally adjusted numbers exclude the “effects of regular or seasonal patterns,” according to the BLS.
“Over the course of a year, the size of the nation’s labor force and the levels of employment and unemployment undergo regularly occurring fluctuations. These events may result from seasonal changes in weather, major holidays, and the opening and closing of schools,” the BLS states.
The BLS reports category U-3 as the official unemployment number. For March, categories U-1 and U-2 are the lowest at 4.6 percent and 4.5 percent respectively, while U-5 and U-6, at 9.6 percent and 14.5 percent, include all those who no longer receive unemployment compensation.
When comparing BLS unemployment numbers to statistical information from other forecasters such as Gallup, a financial trend forecaster, the difference is minimal. For March, the Gallup numbers are 0.1 percent lower than the BLS numbers, a minute difference.
“U.S. unemployment, as measured by Gallup without seasonal adjustment, declined to 8.4% in March from 9.1% in February, while Gallup’s seasonally adjusted rate fell to 8.1% from 8.6% in February,” announced Gallup in its latest unemployment number release.
There are others, such as the United States Misery Index, which calculates economic health by adding the BLS unemployment rate to the inflation rate. But, most of them are different ways of using the BLS numbers and add nothing to the unemployment debate.
The Unemployment Data website suggests using current employment data to calculate unemployment numbers, which is available from the BLS and corresponds to actual employment data.
“In many ways the actual employment data presents a much more reliable way of looking at jobs than the unemployment rate. From this chart you can see the number of jobs that are filled at any given time and thus the number of people that are actually employed,” said the article on the Unemployment Data website.
Are BLS Numbers Distorted?
The question of BLS numbers being fudged is being asked by a number of researchers, including the Unemployment Data website. The Unemployment Data article compares the BLS seasonally unadjusted numbers with Gallup’s from January 2010 to March 2012.
Gallup uses the Moore Inflation Predictor, which through historical trend analysis has been shown to be highly accurate, according to an article on the inflation data website.
The comparison indicates that BLS unemployment numbers were higher 12 times compared to the 14 times that Gallup numbers were higher.
“But the average difference is 0.60% when the Gallup numbers are higher and 0.29% when the BLS numbers are higher resulting in a total difference of 4.9% instead of 4.0% in the previous data,” the Unemployment Data analysis suggests.
Based on the Unemployment Data analysis, “although the difference isn’t massive it does appear that the BLS numbers are biased to the low side compared to the independently surveyed Gallup numbers.”
Jobs as an Indicator of U.S. Economic Recovery
“The labor market will continue to improve but at a slow and fitful pace. In addition, to the extent that job and wage growth remain weak, the recovery is also likely to remain soft, with the US experiencing growth of around 2% for the remainder of this year,” said CFA Russ Koesterich in an article on the iShares Blog.
In March, 120,000 nonfarm people were hired versus an average of 246,000 people per month during the past three months. The majority of jobs were provided by the manufacturing and leisure and hospitality sectors, while the retail trade lost 34,000 jobs in March.
However, the total seasonally adjusted employment numbers in the United States shrank by 31,000 from 142,065,000 to 142,034,000.
Therefore, it is surprising that Sageworks Inc., a financial analysis firm, finds a positive trend in the employment numbers. Sageworks believes that sales growth of about 8 percent and profit margins of nearly 6 percent are a move in the right direction and a positive sign.
“March’s unemployment report demonstrates that the trend towards increased hiring continues, albeit slowly,” said Michael Lubansky, a senior financial analyst, in a Sageworks press release.
Optimism Not Shared
Not all are as optimistic as Sageworks. In the week ending April 7, seasonally adjusted unemployment insurance claims increased by 13,000 from the prior week to 380,000, although the total seasonal adjusted claims figures decreased by 98,000 the last week of March. However, the reduced claims do not indicate if the people were re-employed or just no longer eligible for unemployment benefits.
This increase in jobless claims is the highest weekly increase since the end of last year and by far the largest since about mid-January. Besides, “the upward deviation from the trend—defined as difference in the latest weekly claims number vs. its four-week moving average—is the most in nearly a year,” according to an April article on the Capital Spectator website.
The latest BLS information on job openings does not include March, which will not be released until the beginning of May. But the February 3.5 million job openings were not much different from the January numbers. Only 3.3 percent of jobs were filled, while 3.1 percent of jobs were lost, resulting in a net figure of 0.2 percent jobs filled. The BLS suggests that the numbers are positive, as the job openings increased by 46 percent since June 2009.
“The latest news on claims isn’t good. And if we consider the report in context with the dramatic slowdown in jobs growth last month, the cyclical clouds look even darker. … The payrolls report for March delivered a negative surprise last week in the form of a dramatically lower number of new jobs,” the Capital Spectator article stated.