Gallup US Payroll to Population

The December U.S. Payroll to Population employment rate (P2P) declined to 42.9 percent from 43.7 percent in November. It is the lowest Gallup has measured since March 2011. Gallup’s P2P metric estimates the percentage of the U.S. adult population aged 18 and older that is employed full time by an employer for at least 30 hours per week. P2P is not seasonally adjusted. From December 2012, the P2P rate is down from 44.4 percent in December 2012 and 43.8 percent in December 2011, but is higher than the 42.4 percent of December 2010.

Unlike Gallup’s P2P rate, which is a percentage of the total U.S. population, traditional employment metrics, such as the unemployment rates Gallup and the U.S. Bureau of Labor Statistics (BLS) report, are a percentage of the workforce. Gallup defines the “workforce” as adults who are working or actively looking for work and available for employment. The U.S. workforce participation rate in December was 65.8 percent, down from November’s 66.9 percent and from 66.8 percent in December 2012.

Without seasonal adjustment, Gallup’s December unemployment rate was 7.4 percent. Gallup’s seasonally adjusted U.S. unemployment rate for December, using an estimate of the government’s likely adjustment factor, is 7.6 percent, down from 8.6 percent in November. Gallup calculates this rate by applying the adjustment factor the government used for the same month in the previous year, which in December 2012 was an increase of 0.2 percentage points. The exact adjustment the government uses for December 2013 will not be known until Friday’s BLS release. The government’s unemployment estimates are relatively stable from month to month; Gallup’s measure of unemployment tends to exhibit more monthly fluctuation.

Gallup’s Payroll to Population, underemployment, and unemployment metrics are based a series of questions that Gallup asks daily of a nationally representative sample of 1,000 adults, aged 18 and older. Results are reported daily and monthly, based on approximately 29,000 interviews, including approximately 18,000 in the workforce. Daily results reflect 30-day rolling averages.

When the 4 week average falls, like it did a few months ago, it’s meaningful and the best real time high frequency indicator of employment.

When it rises it isn’t (just saying):

Initial jobless claims fell 15,000 in the January 4 holiday week to 330,000, which is 1,000 below the Econoday consensus. But in an offset, the prior week is now revised 6,000 higher to 345,000. Though the 4-week average is down a sharp 9,750 to 349,000, it is still trending nearly 20,000 higher than the month-ago comparison.

Continuing claims, reported with a 1-week lag, are also trending higher, up 50,000 in the December 28 week to 2.865 million. The 4-week average of 2.872 million is more than 75,000 higher than the month-ago comparison. The unemployment rate for insured workers, which held at a recovery low of 2.1 percent through most of November, is at 2.2 percent for a 4th straight week.

Led by yesterday’s ADP estimate, most indications on the job market improved sharply in December but not jobless claims. Yet claims this time of year are notoriously hard to read, the result of shortened weeks and exaggerated effects from seasonal adjustments.