Initial jobless claims show a distinct downward trend in recent weeks. For the week ended December 25, initial jobless claims fell 34,000 to 388,000. Inclement weather in the East coast could have distorted these readings; additional weekly readings will be necessary to confirm that hiring conditions have changed. The 4-week moving average of initial jobless claims stands at 414,000, the lowest since July 2008 (see Chart 1).
The ADP estimates show a gain of 297,000 private sector jobs, largely in small and medium sized firms, during December. However, at the same time, the employment indexes of the ISM surveys, manufacturing (55.7 vs. 57.5 in November) and non-manufacturing (50.5 vs. 52. 7 in November), posted declines in December (see Chart 2).
The Challenger survey of layoffs for December presents an upbeat picture of hiring conditions. In December, the number of layoffs announced (32,004) was noticeably smaller than the November count (48,711).
In sum, the Challenger report of layoffs, ADP tally of jobs created, and the jobless claims report signal a strongly improved labor market environment in December compared with the ISM surveys, which point to more moderate gains in employment. Both indexes are holding above 50.0 but they posted declines in December. The inference from these surveys is that payrolls grew by a smaller measure in December compared with the situation in November. Our forecast is a gain of 175,000 jobs in December after an increase of 39,000 jobs in November. The unemployment rate most likely edged up to 9.9% from 9.8% in November. The December employment report will contain annual revisions of the jobless rate.
The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.
