Initial claims for unemployment provide a worrying set up for tomorrow’s jobs numbers

If you dig—and not very deeply—the initial claims for unemployment numbers released this morning are worrying. Even though the number of workers filing new claims for unemployment dropped more than expected, the trend seems to point to a slowdown in hiring gains.

For the week ending April 28 initial claims for unemployment fell to 365,000. That is down from the 392,000 initial claims filed in the week that ended April 21. (The data for that week were revised upwards to 392,000 from an initially reported 388,000.) Economists surveyed by Briefing.com had expected the claims number to drop to 375,000.

So what’s the problem? Read more

March jobs numbers disappoint–I mean REALLY disappoint

Talk about a bad set up for first quarter earnings season that starts on Tuesday, April 10.

Today the Department of Labor announced that the economy added just 120,000 jobs in March. That was down from 240,000 new jobs in February and below the median forecast among economists surveyed by Bloomberg of 205,000. The March disappointment also broke a string of months with gains of 200,000 or more.

Today’s numbers are a dose of cold reality thrown on any inclination that the U.S. stock market might have to look past disappointing first quarter earnings figures on the hope that U.S. economic growth for the rest of the year would be stronger than expected. First quarter earnings are forecast to have grown by just 0.93% from the first quarter of 2011, according to Standard & Poor’s Capital IQ. In the first quarter of 2011 the annual earnings growth rate was 19.7%. First quarter earnings season officially kicks off with Alcoa’s (AA) report after the close of the New York markets on Tuesday, April 10.

The number of new jobs wasn’t the only measure that fell in March. Weekly hours worked fell to 34.5 from 34.6 in February. Hourly earnings increased by 0.2% but with the economy creating only 120,000 new jobs in March, aggregate wages were flat on the month after climbing 0.7% in February. That’s not good news for an economy where consumer spending makes up 70% of all economic activity.

The official unemployment rate did drop to 8.2% from 8.3%, but that was only because 330,000 people left the workforce.

Oddly enough, the full unemployment number, the one that counts discouraged workers who have stopped looking for work and workers in part-time jobs who are looking for full-time jobs fell in March to 14.5% from 14.9%.

That oddity raises an important question: Are today’s numbers correct? The jobs numbers have been subject to huge revisions in the slow recovery from the Great Recession. Remember August 2010 when the initial report showed the economy added 0 jobs? That initial result was revised upward the following month to 100,000 jobs added in August.

Statistically, as Ezra Klein points out in his post on the Washington Post’s WONKBLOG today http://www.washingtonpost.com/blogs/ezra-klein/post/march-jobs-report-how-bad-is-it/2012/04/06/gIQAhnTXzS_blog.html , there’s a 90% confidence level that the economy added somewhere between 20,000 and 220,000 jobs in March.

That’s quite a margin of error. In the short-term, I doubt that the market will care about the quality of this evidence of a slowdown in the economy. In the short-term this is yet one more reason to sell after the great first quarter rally. If you were inclined to think longer-term, however, I would wait for the revisions in early April before drawing any conclusions about U.S. growth.

There was enough weakness in this morning’s initial claims for unemployment number to raise a (so far very small) warning flag

Oh, those pesky revisions.

This morning’s stories on the initial claims for unemployment data released today say that claims declined to 359,000 for the week that ended on March 24 from 364,000 for the week that ended on March 17.

Absolutely true.

But the initial claims level only showed a drop because the Department of Labor revised the numbers for the previous week (the one that ended on March 17) upward. Without that revision, we’re looking at an increase in initial claims from the unrevised 348,000 for the week of March 17.

Why is this important? Read more

Initial claims for unemployment fell to 348,000 for the week ended March 17 from 353,000 for the prior week. Economists surveyed by Bloomberg had projected a drop to 350,000.

The four-week moving average, a less volatile measure that is a better indication of the trend in unemployment than the weekly number, fell to 355,000 from 356,250. The four-week moving average began 2012 at 382,500.

This week’s initial claims survey period includes the 12^th of the month when the Labor Department conducts its survey of employers to calculate the monthly jobs growth. Today’s initial claims number is consistent with a monthly gain of 200,000 jobs or more. That kind of jobs growth would make March the fourth consecutive month with better than 200,000 net jobs added to the economy. (The March jobs numbers are scheduled for release on April 6.)

Continuing claims for unemployment fell by 9,000 in the week ended March 10 to 3.35 million. The number of long-term unemployed who have used up their regular unemployment benefits and are receiving emergency and extended benefits dropped by 16,000 to 3.31 million in the week ended March 3. (Unemployed workers on extended benefits don’t get counted in the regular continuing claims figure.)

Drop in initial claims for unemployment supports odds that economy will add 200,000 jobs or more in March

Modestly better news from this morning’s report on initial claims for unemployment is enough to increase expectations for strengthening U.S. economic growth. Initial claims fell from 365,000 for the week ended on March 3 to 351,000 for the week ended March 10. That was the lowest number for initial claims since March 2008. Economists surveyed by Briefing.com had projected that initial claims would drop to 355,000. (The initial claims number for the week ended March 3 was revised upward from 362,000.)

Continuing claims for unemployment fell to 3.343 million for the week ended March 3 from 3.416 million for the week ended February 25.

So what’s not to like about these numbers? Read more