The imminent arrival of the non-farm labor report for the month of May has jobs data geeks in a positive frenzy. The "consensus" prediction of economists is that the Bureau of Labor Statistics will report a gain of around 500,000 jobs. At The Big Picture, James Bianco excites us with the news that this is the largest consensus guess ever -- well, at least since 1986, which is as far back as we have consensus data. Bianco also goes on to note the range of guesses, from a low of 100,000 to a high of 750,000, is the widest ever.
Good times. Of course, there is a caveat to these numbers large enough to drive a bus full of Census workers through -- temporary Census hiring may inflate the total number by 400-500,000. So to get a sense of how the labor market is really doing, as Calculated Risk dutifully reminds us, we will have to subtract the Census hires from the total. The ADP private sector jobs report, which is always released two days before the government's nonfarm labor report, recorded only 55,000 new jobs in May, 10,000 less than in April. The ADP report is notoriously unreliable in predicting the government numbers, but it's still not a particularly encouraging sign.
Another unencouraging sign comes from the jobless claims front, which has remained stuck in the mid-to-high 400,000s for months. Along with many other economic indicator junkies I've been mystified as to how the government could be reporting steadily improving payroll numbers without any sign of corresponding improvement in the jobless claim statistics. But here, Bloomberg comes to the rescue with a truly impressive stab at data deconstruction, "Jobless Claims Data May Sound False Alarm for U.S. Labor Market."
Once upon a time, jobless claims were the stat that everyone kept their eyes glued on the most obsessively, but now, reports Bloomberg's Shobhana Chandra, the indicator is losing its "cachet."
One reason for the divergence is the "dramatic extension" of benefit payments, which can go on for up to an unprecedented 99 weeks in some states, Greenlaw said. The protracted support provides an incentive to file, even among those who may not be eligible, he said.
Initial claims figures are a tally of applications for benefits rather than approvals, and historically, half the applications are rejected, said Greenlaw.
The rejection rate, which Greenlaw calculated by comparing initial claims to the actual number of people getting their first payment, began to rise in March and April, so the elevated claims may reflect an increase in ineligible filers, rather than more firings, he said.
If "an increase in ineligible filers" seems like a slender thread upon which to hang one's hopes for a recovering labor market, well so be it. At this point, we'll snatch at anything we can get.