In mid-2014, we introduced the EMSI Job Forecast, a prediction of the previous month’s change in employment three days before the BLS releases its initial number. The goal of our forecast, which is based on a number of leading labor market indicators and data releases, is to give an early look at the current state of the labor market.
We release the job forecast the Tuesday before every monthly jobs report.
The March Job Forecast: +239K Jobs
EMSI’s forecast shows that U.S. employers added 239,000 net jobs in March, an estimate that includes total non-farm payroll employment (government included). When factoring in BLS revised numbers, this estimate would mean that more than 200,000 jobs have been added each month for over a year (since February 2014).
What’s Behind the Number?
Here are a few factors driving EMSI’s predicted jobs number:
- Real GDP grew 2.2% in the fourth quarter, according to the BLS’s third estimate, which is down from the 2.6% estimate released in January but consistent with the 2.2% revision from February. This is well below the third quarter’s spectacular 5% rate.
- Personal income increased during February 2015 by 0.4%, which is slightly above the January rate of 0.3%.
- Initial unemployment claims decreased by 7,750 last week, but the four-week seasonally adjusted average increased around 8,100 from the previous month.
How Have We Performed?
We launched the forecast in August, but we’ve been tracking our model’s performance since we developed it in the summer of 2013. How have we fared?
BLS Comparison (In Thousands)
Since July 2013, EMSI’s average error is +/- 31,950 compared to the BLS benchmark. (Benchmarks are comprehensive counts of employment, primarily derived from unemployment insurance tax reports that nearly all employers are required to fill with state workforce agencies.)
What Else Are We Tracking?
Labor Force Participation Rate and Unemployment Rate
Labor force participation is a good indicator of economic health because it reveals the number of people who are employed and those who are looking for work.
When looking at the year-to-year numbers, we see that the participation rate is experiencing a steady decline rather than the improvement that we might expect as we recover from the recession. From February 2014 to February 2015, the unemployment rate decreased 1.2%, and the participation rate during the same period hardly changed, decreasing by only 0.2%.
The declining participation rate is also visible when comparing recent months. From January 2015 to February 2015, the participation rate fell slightly from 62.9% to 62.8%, and the unemployment rate went from 5.7% to 5.5%.
Labor Market Health
Between February 2001 and January 2008, the labor market improved by 5.6 million new jobs. That was before the recession hit. Then, from January 2008 to February 2015, we added only 2.76 million new jobs, leaving us with a shortfall of 3.7 million jobs that we would have had if the recession hadn’t happened. When will employment catch up to where it would be if the recession hadn’t hit? According to EMSI calculations, we can expect to catch up to where we would have been by June 2016.
The EMSI Job Forecast is calculated using a time series of leading indicators from federal data sources. Our model includes data on initial job claims from the Department of Labor, various economic indices, and employment data from the Bureau of Labor Statistics. The job forecast covers total non-farm payroll employment in the U.S., including private-sector and government jobs. EMSI’s goal is to predict the BLS’s change in employment in the most accurate way, with an eye toward the preliminary monthly figure and the final number.
Note: Our monthly job forecast methodology is not related in any way to our approach to producing quarterly employment projections by industry and occupation.
Emsi turns labor market data into useful information that helps organizations understand the connection between economies, people, and work. Using sound economic principles and good data, we build user-friendly services that help educational institutions, workforce planners, and regional developers (such as workforce boards, economic development offices, chambers of commerce, and utilities) build a better workforce and improve the economic conditions in their regions.