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Forecasting the January 2021 Labor Market Report

Written by Phillip Sprehe

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.



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