Jobs are out there if you look at the signs

August 17, 2012

COLUMNS, Unemployment

It happened again! How could we add 163,000 jobs and then see our unemployment rate go up to 8.3 percent?

There are three pieces of jobs data that tell us about the condition of the labor market. Two are reported monthly, and one is reported weekly.

The weekly number tells us how many new claims for unemployment checks occurred in the last week. The figure is reported every Thursday morning. Because it is a weekly number, it can vary and is not given as much weight as monthly numbers. Instead, we look at trends on this data. Currently, anything below 400,000 claims per week is a good sign, and we look for a rolling average that is steadily declining. In order to really have an impact on total unemployment, the number needs to be significantly below 400,000, though. We’ve been staying in the 350,000 to 375,000 range.

The two monthly numbers are reported on the first Friday of each new month. One reports the percentage of unemployed and is most often cited in the news. It is calculated by calling 60,000 households and surveying residents about their job situation and searches. Because it is dependent on household responses, it can be a bit fuzzy, and it doesn’t count people who have simply given up on job searches.

The second piece of data is collected by surveying around 140,000 businesses to find out numbers of jobs added and lost during the month. It measures actual job creation, and Wall Street gives more credence to this figure. Anything above 150,000 is a good sign, and last month’s figure of 163,000 was applauded by investors. Know that we need significantly above 150,000 in order to really make a dent in overall unemployment.

Both sets of monthly data are adjusted for seasonal variations. Occasionally, the two numbers diverge as they did last month, but this is usually temporary. Look for them to come back into agreement next month.

No single piece of data tells the whole story, but when it comes to employment, the only figure that really counts is the one on your paycheck. When I see help wanted signs and a commercial from Ingall’s Shipbuilding advertising jobs, I’m thinking, “Now that’s a number I can take to the bank!”

Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158. She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her website is www.newper.com.

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