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Initial jobless claims totaled 286,000 for the week ended Jan. 15, well above the 225,000 estimate.
Continuing claims also rose, jumping to 1.64 million.
The Philadelphia Fed manufacturing index was higher than expected, though the future prices paid index, an inflation gauge, hit its highest level since August 1988.
Jobless claims took an unexpected turn higher last week in a potential sign that the wintertime omicron surge was hitting the employment picture.
Initial filings for the week ended Jan. 15 totaled 286,000, well above the Dow Jones estimate of 225,000 and a substantial gain from the previous week’s 231,000.https://datawrapper.dwcdn.net/ct6dm/1/
The total was the highest since the week of Oct. 16, 2021 and marks a reversal after claims just a few weeks ago had hit their lowest level in more than 50 years.
Continuing claims, which run a week behind the headline data, also shot up, rising 84,000 to 1.64 million. One bright spot in the data showed that the four-week moving average for continuing claims, which irons out weekly volatility, declined by 55,250 to 1.664 million, the lowest since the week ended April 27, 2019.
California showed a sharp 6,075 jump in claims while New York reported a slide of 14,011, according to unadjusted data.
Total recipients of all unemployment compensation programs rose by 180,114 to 2.13 million, according to data through Jan. 1.
Jobless claims are seen as a leading real-time gauge of the employment picture, which has brightened in some respects but is still beset by multiple trouble spots.
The unemployment rate has fallen to 3.9% after a record year of nonfarm payrolls growth. Still, the total employment level remains 2.9 million below where it was in February 2020, just prior to the pandemic declaration.
Labor force participation remains well below pre-pandemic levels, with the current 61.9% rate 1.5 percentage points below the pre-Covid level. The labor force has contracted by nearly 2.3 million during the period.
A separate economic report Thursday morning showed that manufacturing activity expanded faster than expected in the Philadelphia area.
The Philadelphia Federal Reserve’s outlook survey registered a reading of 23.2, a measure of the percentage point difference between companies reporting expansion vs. contraction. The estimate had been for 18.5. Just 16% of the companies surveyed said they expect decreases in activity, with gains coming in new orders and future shipments.
The employment index stumbled 19 points to 38.4, but that still reflects expectations of employment growth.
Inflation, however, remains an issue. The future prices paid index surged 23 points to 76.4, its highest level since August 1988.Squawk on the Street
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Updated: Boston Real Estate Blog 2022
Boston Condos for Sale and Apartments for Rent
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At first glance, one might want to cheer that the nation’s unemployment numbers are improving. However, if you dig deeper into the numbers and consider that the health situation is NOT improving. One may not want to cheer – yet.
Here are two interesting insights on the last unemployment report:
What about a supposed misclassification?
The BLS addressed this at length in a blog post last week, and concluded by saying:
“Regardless of the assumptions we might make about misclassification, the trend in the unemployment rate over the period in question is the same; the rate increased in March & April and eased in May.”
They specifically noted the issue in the latest report by explaining that if they adjusted the rate for the potential miscalculation, it would increase from 11.1% to 12.1% (which is lower than the adjusted rate of 16.4% last month). They went on to say:
“However, this represents the upper bound of our estimate of misclassification and probably overstates the size of the misclassification error.”
Does the shutdown of parts of the economy skew the unemployment numbers?
Because the uniqueness of 2020 impacts the employment situation in so many ways, each jobs report is now examined with a microscope to make sure the headlines generated by the report accurately convey what’s happening in the job market.
One such analysis is done by Jed Kolko, Chief Economist at Indeed. He believes the extraordinary number of people in the “temporary” unemployed category confuses the broader issue of how many people have permanently lost their job. He adjusts for this when calculating his “core unemployment rate” (which subtracts temporary layoffs and adds unemployed who didn’t search for a job recently).
The bad news is that his analysis reveals that the number of permanently unemployed is still rising (from 4.6% in April to 5.9% last month). The good news, however, is when you use his methodology to look back at the Great Recession, today’s “core unemployment rate” is significantly lower (5.9% versus 10.5% in April 2010).
Boston Real Estate and the Bottom Line
Last week’s jobs report was much better than most expected. However, we should remain cautious in our optimism. As the Wall Street Journal explained in their analysis of the jobs report:
“U.S. job growth surged last month, underscoring the economy’s capacity for a quick rebound if businesses continue to reopen and consumers regain confidence. A recent coronavirus spike, however, could undermine trends captured in the latest jobs report.”
