{"id":3430,"date":"2011-02-04T07:10:17","date_gmt":"2011-02-04T14:10:17","guid":{"rendered":"http:\/\/www.jasonapollovoss.local\/?p=3430"},"modified":"2018-09-21T02:08:16","modified_gmt":"2018-09-21T06:08:16","slug":"unemployment-data-for-january","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2011\/02\/04\/unemployment-data-for-january\/","title":{"rendered":"Unemployment data for January"},"content":{"rendered":"

This morning the January unemployment data was released by the Department of Labor.\u00a0 I am guessing that most pundits are going to focus on the low number of net jobs added by all of the various economic sectors.<\/span><\/p>\n

 <\/p>\n

Specifically, total non-farm payrolls increased by 36,000 last month.\u00a0 This compares to an expectation of 136,000 new jobs added by a consensus of economists.\u00a0 The overall unemployment rate fell to 9.0%, whereas it was expected the unemployment rate would fall to 9.5%.<\/span><\/p>\n

 <\/p>\n

Analysis:<\/strong> It would be difficult to spin this data into something super positive, but there are several silver linings here.\u00a0 But more on that in a moment.\u00a0 Encouragingly, the private sector added 50,000 jobs last month.\u00a0 that means that sans private employers the economy actually lost jobs last month.<\/span><\/p>\n

 <\/p>\n

I don’t consider that to be a bad thing.\u00a0 Governments at all levels of society, local-state-national, are cash strapped and debt inundated.\u00a0 During the Great Recession it was very important that the government pick up some of the massive hiring slack.\u00a0 Now that the economy is recovering it is understandable that there would be jobs lost in the public sector of the economy.<\/span><\/p>\n

 <\/p>\n

Now, private employers didn’t exactly screamingly participate in the market for hiring new folks.\u00a0 However, 50,000 jobs is still 50,000 jobs added.\u00a0 While the total number of hires didn’t meet expectations, the fact is that we still are in positive territory for the number of jobs added.<\/span><\/p>\n

 <\/p>\n

Something interesting is happening.\u00a0 Something interesting that I have shared with readers before is always a telling sign.\u00a0 What?\u00a0 There are several sources of jobs data, the Department of Labor data that we have today, the Commerce Department’s weekly jobless claims, and the Automatic Data Processing (ADP) jobs data.\u00a0 Right now they are in disagreement with one another.\u00a0 That is always a sign that change is happening more rapidly than statistical methods can capture.<\/span><\/p>\n

 <\/p>\n

In other words, we are in a moment of flux.\u00a0 That’s why the data don’t agree with one another in terms of magnitude<\/em>.\u00a0 But, the even more interesting thing is that the data do agree in terms of direction.\u00a0 That is, the data agree that the jobs market is improving<\/em><\/strong>.\u00a0 The disagreement is in how fast jobs are being added.\u00a0 ADP says lots of jobs are being added, whereas the governmental data says that the number is much lower.<\/span><\/p>\n

 <\/p>\n

But that brings me to my next point.\u00a0 My focus in these data is almost never on the current data, but on the revisions to previously reported data.\u00a0 You see, most economy-wide statistics are estimated.\u00a0 That means that as actual data rolls in the old data has to be revised.\u00a0 This marks the third month in a row that the total number of jobs added data has been revised upward<\/em><\/strong>.\u00a0 That means that the statistical methods used to estimate the reality on the ground are consistently under-counting the number of jobs added.<\/span><\/p>\n

 <\/p>\n

Specifically, the number of jobs added in December was revised upward to 121,000 jobs added versus the previous estimate of 103,000 added.\u00a0 Clearly this is a good thing.<\/span><\/p>\n

 <\/p>\n

In these moments of data disagreement there are BIG opportunities as an investor.\u00a0 Most likely the stock market is going to fall today.\u00a0 If you have been sitting on the sidelines with cash this may be a good day to buy.\u00a0 Most investors get nervous when there is a lack of certainty, where there is an uncertain direction.<\/span><\/p>\n

 <\/p>\n

To summarize what I have said so far.\u00a0 The conflicting data from the various providers is an indication of a moment of flux – it seems that things could either go up or down since there is no agreement.\u00a0 Yet, all of the data being reported lately indicates the economy is creating jobs<\/em><\/strong>.\u00a0 Not only that, but all of the revisions for the past several months is upward.<\/span><\/p>\n

 <\/p>\n

Now to the part of the unemployment report that I don’t like.\u00a0 The unemployment rate fell dramatically to 9.0%.\u00a0 On the surface that may sound like good news.\u00a0 However, it is not.\u00a0 The reason is that the unemployment rate only counts folks who are actually looking for work.\u00a0 For the rate to have fallen so far, 0.6% with only 36,000 net jobs being added by the economy, means something unfortunate.<\/span><\/p>\n

 <\/p>\n

Many people are so discouraged by the job market that they have stopped looking for work.\u00a0 These people may not be looking now, but eventually they will need to find work.\u00a0 What that means is that as the labor market improves these folks will again be trying to get hired.\u00a0 In turn, that means that they will then be counted again in the data.\u00a0 And that means that they will put upward pressure on the unemployment rate, perhaps for years to come.<\/span><\/p>\n

 <\/p>\n

This is a fancy way of saying the unemployment rate is going to be stubbornly high for a long time.\u00a0 Ouch!<\/span><\/p>\n

 <\/p>\n

Importance grade:<\/strong> 10; I had dropped the importance grade on these data over the last several months because a stable and upward positive trend was indicated.\u00a0 That meant that we could begin to take the data out of our consciousness to some degree.\u00a0 However, the big disappointment amidst what appears to be a moment of great flux in the labor market has re-upped the importance of this data.<\/span><\/p>\n

 <\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

This morning the January unemployment data was released by the Department of Labor.\u00a0 I am guessing that most pundits are going to focus on the low number of net jobs added by all of the various economic sectors.   Specifically, total non-farm payrolls increased by 36,000 last month.\u00a0 This compares to an expectation of 136,000 […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-3430","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/3430","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=3430"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/3430\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=3430"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=3430"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=3430"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}