Insights and Perspectives

GSI Labor Market Forecast: December 2022

Wed, 04 Jan 2023 15:57:00 GMT

The Bureau of Labor Statistics (BLS) will release its monthly Current Employment Statistics (CES) and Current Population Survey (CPS) report for December 2022 on Friday, January 6^th. Geographic Solutions, Inc. has produced forecasts of the two most closely watched macroeconomic data series from the report: the monthly change in employment and the monthly unemployment rate.

Geographic Solutions’ data is signaling a continuation of job growth between 250,000 and 300,000 experienced in each of the previous four months. As seen in the chart below, jobs are predicted to increase in December by 273,000. Geographic Solutions derives its employment forecast from internal data on the number of job searchers and applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL).

Portrayed in the chart below is the 3.7% unemployment rate that Geographic Solutions forecasts for December, unchanged from its November rate. The unemployment rate forecast uses internal data on the number of job openings, job searchers, job applications, unemployment applications, and job severances on Geographic Solutions state client sites. The forecast uses unemployment claims data from the USDOL.

After the release of the report, Geographic Solutions will post a full analysis of the results.

GSI Labor Market Forecast: October 2021

Tue, 02 Nov 2021 16:45:00 GMT

By Phillip Sprehe

The Bureau of Labor Statistics (BLS) will release its monthly Current Employment Statistics (CES) and Current Population Survey (CPS) report for October 2021 on Friday, November 5th. Geographic Solutions, Inc. has produced forecasts of the two most closely watched macroeconomic data series from the report: the monthly change in employment and the monthly unemployment rate.

The disappointing jobs performance the U.S. experienced in August and September was primarily driven by the emergence of the Delta variant of Covid-19 and local education employment veering from its usual seasonal pattern in the fall. October is showing a lot of uncertainty, but there are more encouraging signs. The seven-day average of new daily Covid-19 cases has declined by more than 50,000. We are likely past the seasonal abnormalities of local education employment, and claims for unemployment benefits fell during the month. These factors should lead to an improved job market in October, but employment is unlikely to approach the 1 million new monthly jobs seen over the summer.

Geographic Solutions derives its employment forecast from internal data on the number of job openings and job searchers. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL). As seen in the chart below, we predict job growth in October of 353,000.

Portrayed in the chart below is the 4.6% unemployment rate that Geographic Solutions forecasts for October, a decrease from the 4.8% rate in September. The unemployment rate forecast uses internal data on the number of job openings, job severances, job applications, job searchers, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites.

After the release of the report, Geographic Solutions will post a full analysis of the results.

Geographic Solutions Forecasts for 09/21 Labor Market Report

Sat, 02 Oct 2021 14:30:00 GMT

The Bureau of Labor Statistics (BLS) will release its monthly Current Employment Statistics (CES) and Current Population Survey (CPS) report for September 2021 on Friday, October 8^th. Geographic Solutions, Inc. has produced forecasts of the two most closely watched macroeconomic data series from the report: the monthly change in employment and the monthly unemployment rate.

Portrayed in the chart below is the 5.3% unemployment rate that Geographic Solutions forecasts for September, an increase from the 5.2% rate in August. The unemployment rate forecast uses internal data on the number of job openings, job severances, job searchers, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the USDOL.

After the release of the report, Geographic Solutions will post a full analysis of the results.

July 2021 Job Growth Accelerates before Covid-19 Variant Takes Hold

Fri, 06 Aug 2021 16:34:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for July 2021 on Friday, August 6^th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 17 months since the Covid-19 economic lockdown. While the results are impressive, hurdles lie ahead with the Covid-19 variant leading some states and localities to reinstate some restrictions on activity.

Employment in the U.S. rose by 943,000 jobs, well above the Geographic Solutions, Inc. forecast of 689,000. The WSJ Economist Survey forecasted new jobs to be 845,000. The major surprise came from employment in Local Government Education which grew by 220,700, the largest increase on record since tracking began in 1955. July is typically a low point for jobs in local education, so the BLS typically adjusts it upwards to seasonalize the data. That appears not to have happened this year, perhaps due to educators being called back into work earlier than usual to prepare for school openings under Covid-19 or an expansion of summer programs. The Geographic Solutions forecast was derived from internal data on the number of job openings, job severances, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast used unemployment claims data from the U.S. Department of Labor (USDOL).

The unemployment rate dropped to 5.4%, below the Geographic Solutions forecast of 6.1% and the WSJ forecast of 5.7%. The unemployment rate forecast used internal data on job openings, job searchers, job severances, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast used unemployment claims data from the USDOL.

Job creation was most pronounced in Leisure & Hospitality (+380,000), the largest driver of new employment for several months even as restaurants and hotels struggle to fill job openings. Job market gains also came from a strong performance in Government that totaled 240,000 new jobs mostly from Local Government Education as already discussed.

Leisure & Hospitality employment continues its climb, but it has a long way to go before completing its recovery. Its employment remains a little more than 10% below February 2020. No other major industry has employment more than 6% below its February 2020 total.

The U-3 unemployment rate is the standard form of measuring unemployment in the U.S. labor market and includes those that are actively seeking a job but unable to find one. The U-3 unemployment rate declined to 5.4% from the previous month.

The labor force participation rate ticked up to 61.7% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment fell 0.6% to 9.2%. All indicators are showing that July was a great month for the U.S. labor market.

The July labor market report is about as good as could be reasonably expected. Yet, this news may be dismissed, because of the emergence of the delta variant which mostly happened after the surveys were conducted. While this will have a diminishing effect on the economy, especially in places that will bring back Covid-19 limitations, the overall labor market should see a healthy expansion for the next few months. It will be much needed as the U.S. still has 5.7 million fewer jobs than before the pandemic began in February 2020.

Geographic Solutions Forecasts for 07/21 Labor Market Report

Mon, 02 Aug 2021 16:38:00 GMT

The Bureau of Labor Statistics (BLS) will release its monthly Current Employment Statistics (CES) and Current Population Survey (CPS) report for July 2021 on Friday, August 6^th. Geographic Solutions, Inc. has produced forecasts of the two most closely watched macroeconomic data series from the report: the monthly change in employment and the monthly unemployment rate.

Geographic Solutions derives its employment forecast from internal data on the number of job openings, job severances, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL). As seen in the chart below, we predict job growth in July of 689 thousand.

Portrayed in the chart below is the 6.1% unemployment rate that Geographic Solutions forecasts for July, an increase from the 5.9% rate in June. The unemployment rate forecast used internal data on job openings, job searchers, job severances, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the USDOL.

After the release of the report, Geographic Solutions will post a full analysis of the results.

Geographic Solutions Forecasts for 06/21 Labor Market Report

Fri, 02 Jul 2021 22:14:00 GMT

The Bureau of Labor Statistics (BLS) will release its monthly Current Employment Statistics (CES) and Current Population Survey (CPS) report for June 2021 on Friday, July 2^nd. Geographic Solutions, Inc. has produced forecasts of the two most closely watched macroeconomic data series from the report: the monthly change in employment and the monthly unemployment rate.

Job growth in April (+278,000) and May (+559,000) indicated that the labor market has hit a soft patch even as vaccines have proliferated. The three crucial factors that have prevented people to return to work are lingering fears of the pandemic, watching over children who are not in school, and extended unemployment benefits. Many state governments moved to restrict eligibility for unemployment benefits in June, so the month should provide a first look at the degree that more generous benefits held back employment. However, a conclusion will at least have to wait until the state employment report is released on July 16^th to compare states that enacted new restrictions with those that did not.

Geographic Solutions derives its employment forecast from internal data on the number of job openings, job severances, job searchers, job applications, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL). As seen in the chart below, we predict job growth in June of 867 thousand.

Portrayed in the chart below is the 5.5% unemployment rate that Geographic Solutions forecasts for June, a decline from the 5.8% rate in May. The unemployment rate forecast used internal data on job openings, job applications, job searchers, job severances, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the USDOL.

After the release of the report, Geographic Solutions will post a full analysis of the results.

June 2021 Job Growth Returns to Healthy Pace

Fri, 02 Jul 2021 18:20:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for June 2021 on Friday, July 2^nd. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 16 months since the Covid-19 economic lockdown and are a welcome sign that employment has moved past the disappointing pattern which was feared to be emerging in April and May.

Employment in the U.S. rose by 850,000 jobs, only 2% below the Geographic Solutions, Inc. forecast of 867,000. The WSJ Economist Survey forecast at 706 thousand jobs underestimated jobs by more than 20%. The Geographic Solutions forecast was derived from internal data on the number of job openings, job severances, job searchers, job applications, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast used unemployment claims data from the U.S. Department of Labor (USDOL).

The unemployment rate slightly increased to 5.9%, above the Geographic Solutions forecast of 5.5% and below the WSJ forecast of 5.6%. The unemployment rate forecast used internal data on job openings, job applications, job searchers, job severances, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast used unemployment claims data from the USDOL.

Job creation was most pronounced in Leisure & Hospitality (+343,000), the largest driver of new employment for several months even as restaurants and hotels struggle to fill job openings. Job market gains also came from a strong performance in Government that totaled 188,000 new jobs. However, Local Government Education (+155,000) strongly suggests that the overall measured increase was mostly due to seasonal adjustments anticipating a “summer recess” effect based on pre-pandemic years.

As stated above, Leisure & Hospitality employment continues its climb, but it has a long way to go before completing its recovery. Its employment remains 13% below February 2020. No other major industry has employment more than 6.5% below its February 2020 total.

The labor force participation rate remained unchanged at 61.6% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment fell 0.4% to 9.8%. When the gap closes between the U-3 and U-6 unemployment rates, it is usually a sign that more people are actively searching for work and possibly abandoning part-time work in order to do so.

The June labor market report will come as a relief to many after earlier lackluster growth. Yet, the U.S. employment level remains 6.7 million jobs below its February 2020 total. The job market would have to generate 1.1 million jobs on average per month to complete the recovery by the end of the year when most surveyed economists are predicting an average of 500,000 for the year. The three crucial factors to watch going forward are lingering fears about the pandemic, parents attending to children not in school or daycare, and state government changes to extended unemployment benefits.

Geographic Solutions Forecast for 05/21 Labor Market Report

Wed, 02 Jun 2021 18:23:00 GMT

The Bureau of Labor Statistics (BLS) will release its monthly Current Employment Statistics (CES) and Current Population Survey (CPS) report for May 2021 on Friday, June 5^th. Geographic Solutions, Inc. has produced forecasts of the two most closely watched macroeconomic data series from the report: the monthly change in employment and the monthly unemployment rate.

Job growth in April (+266,000) signaled the U.S. went through a hiccup in the recovery which should eventually return to the job increases of summer 2020. The three crucial factors that have prevented people to return to work are lingering fears of the pandemic, watching over children who are not in school, and extended unemployment benefits. The $1,400 that most people received in the last relief bill provided a nice cushion that has probably been exhausted by now and compelled many to accept job offers. This is backed up by the GSI job applications data which had its highest monthly percent increase since May 2020 when the U.S. created 2.8 million jobs.

Geographic Solutions derives its employment forecast from internal data on the number of job openings, job severances, job searchers, and job applications. As seen in the chart below, we predict job growth in May of 2.7 million.

Portrayed in the table below is the 5.6% unemployment rate that Geographic Solutions forecasts for May, the first time the unemployment rate declined below 6.0% since its pandemic peak in April 2020. The unemployment rate forecast used internal data on job applications, job severances, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the USDOL.

After the release of the report, Geographic Solutions will post a full analysis of the results.

April 2021 Job Growth Unexpectedly Sluggish

Fri, 07 May 2021 19:23:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for April 2021 on Friday, May 7^th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 14 months since the Covid-19 economic lockdown and surprised most forecasters with its interruption of anticipated strong job growth of at least one million. While strong job growth is still expected over the next year, April demonstrates that month-to-month figures will be uneven as the labor market reestablishes itself post-pandemic.

Employment in the U.S. rose by 266,000 jobs, only a fraction of the 1.6 million jobs expected in the Geographic Solutions, Inc. forecast. The WSJ Economist Survey forecast at 1.0 million jobs was closer but still nearly four times actual employment. The overestimation of jobs was partially due to excessive weight placed on full vaccination rates which went from 10.7% on March 12^th to 22.6% on April 12^th, the date the labor market survey is conducted. March job growth fell from 916,000 to 770,000. January was originally reported at 379,000 new jobs but finalized at 536,000, underscoring the elevated volatility and unpredictability of employment. The Geographic Solutions forecast was derived from internal data on the number of job openings, job severances, and job searchers. The forecast used unemployment claims data from the U.S. Department of Labor (USDOL) as an external indicator in the forecast.

The unemployment ticked up to 6.1%, above the Geographic Solutions and WSJ forecasts of 5.7% and 5.8%, respectively. The unemployment rate forecast used internal data on job openings, job severances, job searchers, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the USDOL.

Explosive job growth was expected in the service-providing sector but subdued increases in the goods-producing sector. Instead, the goods-producing sector lost jobs (-16,000) and service-providing job growth was soft (+282,000).

Job declines were most pronounced in Trade, Transportation, & Utilities (-81,000), most likely the consequence of static goods-sector employment activity which is closely linked to employment in transportation and logistics. Professional & Business Services (-79,000) had similar losses, mostly dragged down by a severe drop in temporary administrative jobs (-111,000). The positive interpretation is that many of these temporary workers are encouraged by their chances of getting a permanent job, and are quitting temp positions to focus on that.

The Leisure & Hospitality sector in April was the only one with job increases in line with the explosive job growth expected as the vaccines are distributed. It totaled 311,000 new jobs. Leisure & Hospitality employment continues its climb, but it has a long way to go before completing its recovery. Its employment remains 16.8% below February 2020. No other major industry has employment more than 10% below its February 2020 total.

The labor force participation rate increased to 61.7% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment fell 0.3% to 10.4%. The increasing U-3 rate along with a declining U-6 rate demonstrates that previously discouraged job-seekers are jumping back into the labor market.

Bluntly stated, the April labor market report was a shocker. Despite news of shortages in semiconductors slowing manufacturing, lumber prices as a dragging force on construction, and supply chain issues, overall demand for labor is high. U.S. job openings in February 2021 were 7.4 million plus hourly earnings and average weekly earnings jumped in April. It appears that going forward that employment changes will mostly depend on the labor supply, and its ability and willingness to meet the robust demand in the labor market.

March 2021 Growth Returns to Scale of Early Recovery

Fri, 02 Apr 2021 19:03:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for March 2021 on Friday, April 2^nd. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 13 months since the Covid-19 economic lockdown and signal that job growth is approaching one million per month which has not been seen since the first few months of the pandemic recovery. Strong growth will continue as more Covid-19 vaccinations are administered throughout 2021.

Employment in the U.S. rose by 916,000 jobs, nearly double the 462,000 jobs expected in the Geographic Solutions, Inc. (GSI) forecast. The WSJ Economist Survey forecast at 675,000 jobs was closer but still short by more than 35%. The lower miss by the GSI forecast was partially due to an over-consideration of the delays and disruptions in supply chains that occurred over the last month. Explosive job growth was expected in the service-providing sector but subdued increases in the goods-producing sector. January and February 2021 also experienced large upward revisions. February job growth increased from 379,000 to 462,000. January was originally reported at 49,000 new jobs but finalized at 233,000, underscoring the elevated volatility and unpredictability of employment. The GSI forecast was derived from internal data on job severances and the number of applications for unemployment benefits filed on GSI state client sites. The forecast used unemployment claims data from the U.S. Department of Labor (USDOL) as an external indicator in the forecast.

The unemployment rate fell to 6.0%, matching the WSJ’s estimate and a little under GSI’s estimate of 6.3%. The unemployment rate forecast used internal data on job openings, job severances, job searchers, and the number of applications for unemployment benefits filed on GSI state client sites. The forecast uses unemployment claims data from the USDOL.

Contrary to expectations, goods-producing industries had its largest increase in employment since June 2020. Employment in the service-providing industries continues to accelerate.

Job market gains came from a strong performance in the Leisure & Hospitality sector in March that totaled 280,000 new jobs, an encouraging sign for the most beleaguered sector since the onset of the pandemic. Construction jobs also provided a significant source of growth, increasing 110,000. After Government lost jobs in February, it added 136,000 in March, buoyed by state and local education.

Leisure & Hospitality employment continues its climb, but it has a long way to go before completing its recovery. Its employment remains 18.5% below March 2020. No other major industry has employment more than 10% below its March 2020 total.

The labor force participation rate edged up to 61.5% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment fell 0.4% to 10.7%. The declining U-3 rate along with a sustained or increasing labor force participation rate demonstrates that more unemployed persons, both discouraged and job-seeking, are becoming employed.

Overall, the March labor market report shows that we have entered a new phase in the recovery that returns to the job increases of summer 2020. Approximately 15% of the U.S. population is fully vaccinated from Covid-19. As vaccinations proliferate and consumers feel more comfortable venturing out, job growth will improve across the board. Leisure & Hospitality will especially grow when the summer tourism season arrives.

Jobs Pick up in February 2021

Fri, 05 Mar 2021 19:44:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for February 2021 on Friday, March 5^th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 12 months since the Covid-19 economic lockdown and signal the labor market recovery is gaining steam after moving into a lull at the end of 2020. Strong growth should reassert itself as more Covid-19 vaccinations are administered later in 2021.

Employment in the U.S. rose by 379,000 jobs, quite a bit higher than the 273,000 jobs expected in the Geographic Solutions, Inc. (GSI) forecast. However, the forecast still outperformed the WSJ Economist Survey forecast of 210,000 jobs. The lower miss by the GSI forecast was partially due to factoring in the effects of the cold weather and power outages in the Midwest and heartland. January 2021 also experienced a large upward revision from 49,000 to 166,000 new jobs, demonstrating the elevated volatility of employment. The GSI forecast was derived from internal data on job openings, job severances, and the number of applications for unemployment benefits filed on GSI state client sites. The forecast used unemployment claims data from the Department of Labor as an external indicator in the forecast.

The unemployment rate fell to 6.2%, just under the GSI and WSJ forecasts of 6.4% and 6.3%, respectively. The unemployment rate forecast used the same indicators as the employment forecast.

Goods-producing industries established a stronger initial recovery but have experienced job loss both in January and February 2021. The good news is that service-providing jobs, which make up the bulk of the labor market, accelerated in January and February and are set to improve on this momentum later this year.

Job market gains came from a strong performance in the Leisure & Hospitality sector in February that totaled 355,000 new jobs, an encouraging sign for the most beleaguered sector since the onset of the pandemic. Professional & Business Services jobs also provided a significant source of growth, increasing 63,000. After Government was the second-leading job producer in January, it lost more jobs than any other sector (-86,000). Seasonal expectations of state and local hiring in education seem to have fallen short and contributed the most to the fall in employment in the public sector.

Despite Leisure & Hospitality’s upbeat results in February 2021, it has a long way to go before completing its recovery. Its employment remains 20.4% below February 2020, more than twice the remaining percentage of any other major sector.

The labor force participation rate basically held steady at 61.4% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment remained at 11.1%. The declining U-3 rate along with a sustained or increasing labor force participation rate demonstrates that more unemployed persons are becoming employed.

Overall, the February labor market report indicates that consumers are more comfortable venturing out and resuming some of their pre-pandemic spending habits. We expect for this trend to rapidly increase in the coming months as vaccinations increase and Covid-19 cases decrease. The Biden Administration announced that the U.S. will have enough vaccinations for every adult by the end of May 2021. The hope is that June 2021 employment will return to the more than one million job growth pattern not seen since August 2020.

GSI Forecast for the February 2021 Labor Market Report

Tue, 02 Mar 2021 14:11:00 GMT

The Bureau of Labor Statistics (BLS) will release its monthly Current Employment Statistics (CES) and Current Population Survey (CPS) report for February 2021 on Friday, March 5^th. Geographic Solutions, Inc. (GSI), has produced forecasts of the two most closely watched macroeconomic data series from the report: the monthly change in employment and the monthly unemployment rate.

Modest job growth returned in January (+49,000) after a negative outcome in December 2020 (-227,000). Despite the return to pre-pandemic levels of job changes, the month-to-month volatility has not seen a commensurate decline since September 2020 when job creation was 716,000. Similar volatility with diminished employment growth means that the percentage error is expected to be higher in the next few months until wide distribution of the Covid-19 vaccines sets the economy back on a strong recovery pattern.

GSI derives its employment forecast from internal data on job openings, job severances, and the number of applications for unemployment benefits filed on GSI state client sites. The forecast uses unemployment claims data from the Department of labor. As seen in the chart below, we predict job growth in February of 273,000.

Portrayed in the table below is the 6.4% unemployment rate that GSI forecasts for February, a slight uptick from 6.3% in January. The unemployment rate forecast used the same indicators as the employment forecast.

After the release of the report, GSI will post a full analysis of the results.

GSI Forecast for the January 2021 Labor Market Report

Tue, 02 Feb 2021 16:10:00 GMT

The Bureau of Labor Statistics (BLS) will release its monthly Current Employment Statistics (CES) and Current Population Survey (CPS) report for January 2021 on Friday, February 5th. Geographic Solutions, Inc. (GSI), has produced forecasts of the two most closely watched macroeconomic data series from the report: the monthly change in employment and the monthly unemployment rate.

The labor market begins 2021 during a period of short-term uncertainty. Job growth has weakened over the last several months and turned negative in December 2020 (-140,000). Despite the return to pre-pandemic levels of job changes, the month-to-month volatility has not seen a commensurate decline since September 2020 when job creation was 711,000. Similar volatility with diminished employment growth means that the percentage error is expected to be higher in the next few months until wide distribution of the Covid-19 vaccines sets the economy back on a strong recovery pattern.

GSI derives its employment forecast from internal data on job severance counts and the number of applications for unemployment benefits filed on GSI state client sites. The forecast uses unemployment claims data from the Department of labor. As seen in the chart below, we predict modest job growth in January of 50,000.

Portrayed in the table below is the 6.7% unemployment rate that GSI forecasts for January, maintaining the same rate since November 2020. The unemployment rate forecast used the same indicators as the employment forecast.

After the release of the report, GSI will post a full analysis of the results.

Leisure & Hospitality Continues to Struggle, but Vaccines Offer Hope for 2021

Fri, 08 Jan 2021 16:01:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for December 2020 on Friday, January 8th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 10 months since the Covid-19 economic lockdown and signal a stall in the labor market recovery, which began in May 2020. The December jobs report caps a year that experienced the worst job loss on record (-9.4 million). The good news is that as more Covid-19 vaccinations are administered, we should see a jump start in the recovery take place later in 2021.

Employment in the U.S. declined as expected in the Geographic Solutions, Inc. (GSI) forecast. The contraction was a bit more than estimated with the GSI prediction of 23,000 and the 140,000 actual job loss in December. The forecast outperformed the WSJ Economist Survey which predicted an increase of 50,000. The GSI forecast was derived by using its internal raw numbers on job openings, complete and incomplete UI applications, and job severance dates listed on the UI applications. Covid-19 case counts and UI claims from the Department of Labor were the two external indicators inserted into the forecast.

The unemployment rate remained at 6.7%, just under the GSI and WSJ forecast of 6.8%. This GSI forecast pulled UI claims series from two client states and relied on Covid-19 case counts.

December jobs in goods-producing industries finished the year strong, increasing by 93,000. While impressive, the addition was not enough to compensate for even half of the 188,000 jobs lost in service-providing industries.

The job market losses were chiefly driven by a severe contraction in the Leisure & Hospitality sector in December that totaled a 498,000 jobs loss. Leisure & Hospitality employment is the most sensitive industry to Covid-19 cases and government response measures. Therefore, its poor performance was somewhat anticipated from the spike in cases throughout some parts of the country. Trade, Transportation, & Utilities employment grew the most of any other sector, and unlike November, its growth was spread among all its subsectors.

The graph below illustrates just how much Leisure & Hospitality continues to struggle compared to other industries. Its employment remains 23.2% below February, more than twice the remaining percentage of any other major sector.

The labor force participation rate also maintained its 61.5% rate from the previous month. It is somewhat unusual to see a month with both a job loss and a steady unemployment rate also have a labor force participation rate that remains the same. Job loss combined with a steady or falling unemployment rate typically signals that the unemployed are becoming discouraged and dropping out of the labor force altogether. This would have the expected effect of reducing the labor force participation rate. However, the CPS survey gathers its own employment data and includes those who are self-employed or work in the “gig economy” (ex: Uber drivers). The CPS calculates that employment stayed roughly the same under this method.

The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment ticked down last month by 0.3% to 11.7%. December’s labor market churn resulted in a lower share of the unemployed who are discouraged and not actively seeking work.

While December’s labor market report is disappointing, there are signs that economic conditions will improve within the next few months. The $900 billion in Federal aid signed into law at the end of 2020 and possible further assistance after the new administration is in office will provide relief for the unemployed and businesses and will serve as a modest stimulus during this trailing off period in the job market. However, the real bounce-back will happen when Covid-19 vaccines are widely available and restrictions on activity are lifted.