September Labor Market Trends Indicate Modest Growth

The Employment and Training Administration reported on Thursday that initial claims in unemployment benefits rose slightly in the week ending September 29 from the previous week’s revised figure of 363,000 to 367,000. The current levels indicate that modest job growth is possible for the month of September.

The less volatile seasonably adjusted 4-week moving average remained unchanged from the revised average of 375,000 for the week before. The figure for insured unemployment was 3,281,000 for the week ending September 22, and the insured unemployment rate continues to be flat at 2.6 percent. The rate has been static for weeks and is not likely to change in the near future.

The number of applications filed by Americans seeking jobless benefits continues to fall between the 350,000 to 400,000 range that has been consistent throughout the year. This is a good indicator that Americans will continue to see job growth to some degree and that the labor market isn’t collapsing. However, voters are yet to be satisfied by the level of job growth from month-to-month and mending in the labor market has been too slow to keep pace with population growth.

The dramatic drop in initial jobless claims two weeks ago was good news as claims fell to a two-month low. Economists suggest that, as long as the number of first-time unemployment claims remains consistently under 375,000, job growth could be modest for the month. The latest jobs report from ADP, a private staffing and business services firm, suggests that September may have been a better month for job creation than August.

ADP’s National Employment Report, typically released before the Bureau of Labor Statistics (BLS) releases its Employment Situation Report, says job creators in the private sector added 162,000 jobs in September. Improvement in labor market trends can be a good indicator of better growth in the economy as employers feel more comfortable adding to their payrolls. Analysts expect reports to show that GDP grew by as much as two percent in the third quarter (Q3), which would be an improvement from Q2, but still far from healthy growth.

The BLS and ADP don’t track each other very closely, so there is never a guarantee that their numbers will be the same. However, most economists and experts expect the government’s report to be similar. The Employment Situation Report will release Friday morning. The government’s figures will likely have a significant impact on voter perception going into the final month of the 2012 election season.