There’s been quite a hubbub in the last week or so about a Gallup report that showed seasonally unadjusted unemployment growing 0.7% between mid-January and mid-February. This was contrasted with a seasonally unadjusted increase of 0.4% one year ago.
If there was an increase in unadjusted unemployment of 0.7% in the workforce — that would be about a million people — they should have showed up and filed for unemployment benefits by now. In other words, there should have been a surge in initial claims — not just the number filed, but an increase — of several hundred thousand at least.
Instead, non-seasonally adjusted initial jobless claims have fallen substantially since mid-January, and they’ve also fallen compared with one year ago:
This is no slam against Gallup, I think they have proven their economic numbers as a valuable resource in the last year. But the fact remains that their sample size for unemployment is far smaller than either the 300,000 establishment survey or the 50,000 household survey, so it’s best to look at the trend YoY than any individual month to month swing.
On a seasonally adjusted basis, 351,000 initial claims were filed last week. The 4 week moving average has declined from 377,750 in mid-January to 359.000 now. Since May of that year there has been a fairly constant ratio of changes in weekly initial claims to monthly job growth of roughly 1 to 2.75. That is, for every 10,000 drop in average weekly new jobless claims in a given month, the number of jobs added to the economy has improved by 27,500.
If that trend continues this month, then the most likely February payrolls number to be announced a week from tomorrow is about 50,000 higher than January’s, or 293,000 (plus or minus a 75,000 variance).