The latest economic data reported by Gallup, Rasmussen, ADP and jobless claims, are leaving out a significant trend development in terms of the state of U.S. unemployment. The data have given us a snapshot of this month’s employment situation, but it is not painting the whole picture.
The Data
The U.S. Payroll to Population employment rate (P2P), as measured by Gallup, worsened in May. The index dropped to 43.9%, from 44.5% in April. P2P is also down from May 2012, when it was 44.4%. However, yesterday Gallup’s Economic Confidence Index increased to -7 in May, the highest monthly score since Gallup began tracking economic confidence daily in 2008.
Similarly, yesterday’s Rasmussen Employment Index, which measures worker confidence, rose almost four points in May to the highest level measured since October 2007.
Today it was reported that the number of Americans filing new claims for unemployment benefits fell last week. Initial claims for state unemployment benefits declined 11,000 to a seasonally adjusted 346,000. The Labor Department said that claims for the prior week were revised to show 3,000 more applications received than previously reported. Economists polled by Reuters had expected first-time applications to fall to 345,000 last week.
Employers are forecast to have added 170,000 jobs to their payrolls last month, slightly up from April’s 165,000 count, according to a Reuters survey. This is higher than the ADP report that was released yesterday and measured only 135K private sector jobs were added to the payrolls.
The unemployment rate is expected to hold at an almost 4-1/2 year low of 7.5%, even though employers announced plans to lay off 36,398 workers in May, which represents a 4.5% decline from April and a 41% drop from the year prior, according to outplacement firm Challenger, Gray & Christmas.
he labor market is being closely watched for clues to when the Federal Reserve might start scaling back its expansive monetary stimulus.
The four-week average for the so-called continuing claims was the lowest since May 2008.
What The Data Is Yet Isn’t Telling Us
In has been the trend with Gallup that they are slightly ahead of official economic measurements. Nevertheless, it does bode well for labor-force participation, which has already been at its lowest measurement since the 1970’s.
As far as the decline in weekly first time unemployment claims, last week’s data included the Memorial Day holiday and claims typically fall around this time of the year. The four-week moving average for new claims, which irons out week-to-week volatility, rose 4,500 to 352,500.
Although claims have been volatile in recent weeks, there is little in the numbers to suggest a shift in the moderate pace of job gains, even as the broader economy is struggling under the weight of higher taxes and deep government spending cuts.
Last week’s data has no bearing on Friday’s employment report for May as it falls outside the survey period, and ADP also reported a downward revision from 119K – 113K in last month’s report.
Fed Chairman Ben Bernanke said last month a decision to start tapering the $85 billion in bonds the U.S. central bank is buying each month could come at one of its “next few meetings” if the economy appeared set to maintain momentum.
But the momentum is not heading toward an economy that serves the American people, it is headed rather to an economy where the American people serve the wealthy, while the middle class jobs disappear. Yesterday, the Institute for Supply Management’s gauge of service-sector activity ticked up to 53.7 in May from 53.1 in April, besting estimates of 53.5, and suggesting the sector is still growing. Readings above 50 point to expansion, while those below point to contraction.
As service-sector jobs – you know, the ones where people care to the needs of others – have steadily increased, the Supply Management among other manufacturing indexes have demonstrated a steady trend of descent. In other words, tomorrow’s BLS report will show what it has been showing for four years – after the recovery began in June of 2009 – that the middle class economy is shrinking away.
The whole picture of the American work-force is one in which fewer people are participating or willing to make the choice whether to collect benefits or wait on people who have more money than them. Unfortunately, that has been the trend and I see no reason for it to not continue. You can check out the prior 2013 BLS reports to check my assessment, and I encourage you to do just that. Progressivism never results in the rhetoric.
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- ADP Reports Only 135K Jobs Missing Expectations, April Revised Downward (richardbaris.wordpress.com)
