Another Misunderstood Jobs Report

Strong ADP Report - Remarkable Unemployment Claims Data

This week we received the firs wave of the final economic reports for 2019. We received the December ADP Private Sector Payroll Report, Weekly Unemployment Claims Data, and the December Employment Situation Report. Also included, since the last weekly review, "First-time Claims: Week 251" was written after New Year's Eve. We have had more than 250 consecutive weeks of the seasonally adjusted first-time claims data being reported under 300,000 claims.

(Jan. 6) The week started with the ADP Forecast article "Dec. ADP Forecast: Slowing or Growing" detailed how the private sector number could have come in at 89,000 or 189,000 or even 289,000 new payroll positions. The ADP data is only available in the seasonally adjusted format. All sectors were expected to grow payroll positions month to month and December to December. There was only a question regarding one sector.  It was anticipated that we might not see Natural Resources (M/L) grow month to month. Natural Resources positions were expected to grow December to December.

(Jan. 7) The article "Dec. Jobs Report Forecast: Employment Up, Unemployment Down" examined the Current Population Survey (CPS) data on Jobs and Unemployment and the Current Employment Statistics (CES) data on workers and wages. The trends in the non-seasonally adjusted (NSA) CPS data showed that we would probably record job losses and report seasonally adjusted (SA) job gains this December.  The month to month NSA CES data indicated that some sectors would lose workers and a handful, or less,  would report gains NSA. All sectors except Mining and Logging were expected to report December to December SA worker gains.

(Jan. 8) If you didn't see the forecast article for the ADP report then you may have been caught off-guard with the headline number. "Bombshell Dec, ADP Report"  We saw the expected December to December growth in all sectors except Natural Resources (M/L.) We saw surprising month to month declines in Leisure and Hospitality (LAH,) Information (IT,) and Manufacturing, as well as M/L. The 202,000 headline number came after the October and November data was revised up more than 86,000 position combined. This means that this month we "added" 288,000 payroll positions from the last value. Bombshell.

(Jan. 9)  Thursday we received the final continuing claims data for December 2019 and the first first-time claims data for 2020. We recorded our 252nd consecutive week with seasonally adjusted First-time Claims reported under 300,000 claims. We also reported our 142nd consecutive week with SA Continuing Claims reported under 2.0 million. This is covered in "First-time Claims First Week of January."

(Jan. 10) The December Jobs Report was better than reported, as is detailed in "Dec. Jobs Report: Santa's Surprise" detailed how all sectors except mining and logging grew December to December. We lost fewer non-seasonally adjusted CPS jobs than were expected. Unemployment rose NSA and fell SA. We have our highest December Participation Rate (NSA) that we have had since December 2012.

This was a good week for economic data. The differences between the ADP payroll report data and the CPS/CES Jobs Report data was clear. Unemployment is low. It may take time for people to realize that we could see unemployment claims rise just because of the size of the workforce is growing, while the relative proportion of the covered insured can remain at, or near, historic lows. First-time claims and continuing claims still matter.

It's The Economy.