Gallup Seasonally Adjusted U.S. Unemployment Rate Up in April
Economy

Gallup Seasonally Adjusted U.S. Unemployment Rate Up in April

by Dennis Jacobe, Chief Economist

Unadjusted rate falls to 8.3%, while the seasonally adjusted rate increases to 8.6%

PRINCETON, NJ -- U.S. unemployment, as measured by Gallup without seasonal adjustment, showed a modest decline to 8.3% in April from 8.4% in March. However, applying the government's historical April adjustment to Gallup's unadjusted number yields a seasonally adjusted April estimate of 8.6%, up from 8.1% in March.

Gallup Adjusted and Unadjusted Unemployment Rate Trend, January 2011-April 2012

These results are based on Gallup Daily tracking interviews, conducted by phone, with almost 30,000 Americans throughout the month.

On an unadjusted basis, April's unemployment rate reflects a new low by 0.1 percentage points. The previous low since Gallup began monitoring and reporting unemployment in January 2010 was last month's 8.4%, which tied the reading for several previous months.

Gallup calculates a seasonally adjusted unemployment rate by applying the adjustment factor the government used for the same month in the previous year. Using this adjustment, Gallup's seasonally adjusted rate this year saw its lowest reading in two years, 7.9% in January. However, the seasonal adjustment for April is positive (+0.3 points), and thus increases the 8.3% unadjusted unemployment rate to 8.6%.

Over the past year, both adjusted and unadjusted rates have declined. On an unadjusted basis, the 8.3% unemployment rate in April is down from 9.4% in April 2011. The adjusted unemployment rate has shown a similar decline, with the current 8.6% down from 9.8% a year ago.

More Americans in April Working Part Time but Wanting Full-Time Work

In addition to the Americans who are out of work, another 9.9% of Americans in April were working part time but wanting to work full time. That is up from 9.6% in March, but matches the 9.9% of April a year ago. Gallup does not apply seasonal adjustments to these figures.

Percentage of U.S. Workers Working Part Time but Wanting Full-Time Work, Monthly Averages

Underemployment Increases Slightly

Gallup's U.S. underemployment measure combines the unemployed with those working part time but looking for full-time work. This unadjusted measure increased to 18.2% in April from 18.0% in March. The underemployment rate was 19.3% in April 2011.

Gallup's U.S. Underemployment Rate, Monthly Averages

Looking Ahead to the Government's Unemployment Report

Gallup's unadjusted unemployment rate suggests a slight improvement in the unemployment situation in April when seasonal factors are not taken into account. This is consistent with the slight improvement in Gallup's Job Creation Index in April.

However, the rise in Gallup's seasonally adjusted unemployment rate suggests that the government will report an increase in its seasonally adjusted unemployment rate for April. Such an increase would contrast with the consensus forecast that the government's April unemployment rate will be unchanged at 8.2%. However, it does seem consistent with the increase in jobless claims in recent weeks and Wednesday's ADP report showing that the economy added only 119,000 new private-sector jobs last month -- not nearly enough to lower the unemployment rate, particularly when seasonal hiring should be increasing.

Of course, there are several caveats when using Gallup's seasonally adjusted unemployment rate to estimate Friday's government report. For example, Gallup uses the Bureau of Labor Statistics seasonal adjustments from the prior year to adjust its current results. In February and March, the BLS reduced its 2011 seasonal adjustment by 0.1 points each month when applying it in 2012. If not for this change, Gallup's seasonally adjusted March unemployment rate would have exactly matched the BLS March rate.

Another potential factor involves the workforce participation rate -- the percentage of Americans working or actively looking for work. Gallup shows workforce participation declining to 67.5% in April from 67.8% in March and 68.4% a year ago. While Gallup's survey methodology automatically adjusts for such changes, the government's adjustments sometimes reduce the size of the workforce and simultaneously reduce the unemployment rate to a greater degree than Gallup's adjustments do. That is, a sharp reduction in the April participation rate could keep the government's unemployment rate lower than Gallup's seasonally adjusted rate.

Implications

The increase in Gallup's seasonally adjusted unemployment rate in April could indicate that the drop in the government's unemployment rate earlier this year was influenced by a combination of unusually warm weather, seasonal adjustments, and an early Easter. These factors may have made the employment picture seem better than it otherwise would have been, but that trend may not continue as the spring and summer months approach. If the government unemployment rate increases in April, as Gallup's seasonally adjusted rate has, the unemployment picture would align more closely with the slow economic growth the United States has experienced this year.

Additionally, if the government reports a low number of new jobs being created in April as the ADP report suggests, and an increase in the unemployment rate as Gallup suggests, then the general market assessment may be that the economy is not improving as much as previously estimated. As a result, the Federal Open Market Committee could decide that its inaction at its last meeting is no longer appropriate and could undertake a new effort to push added liquidity into the U.S. economy.

Gallup Unemployment Measures, April 2012

How Gallup's Unemployment Measure Differs From the U.S. Government's Measure

Gallup.com reports results from these indexes in daily, weekly, and monthly averages and in Gallup.com stories. Complete trend data are always available to view and export in the following charts:

Daily: Employment, Economic Confidence, Job Creation, Consumer Spending
Weekly: Employment, Economic Confidence, Job Creation, Consumer Spending

Read more about Gallup's economic measures.

View our economic release schedule.

Survey Methods

Results are based on telephone interviews conducted as part of Gallup Daily tracking from April 1-30, 2012, with a random sample of 28,215 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia, selected using random-digit-dial sampling.

For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±1 percentage point.

Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample includes a minimum quota of 400 cell phone respondents and 600 landline respondents per 1,000 national adults, with additional minimum quotas among landline respondents by region. Landline telephone numbers are chosen at random among listed telephone numbers. Cell phone numbers are selected using random-digit-dial methods. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.

Samples are weighted by gender, age, race, Hispanic ethnicity, education, region, adults in the household, and phone status (cell phone only/landline only/both, cell phone mostly, and having an unlisted landline number). Demographic weighting targets are based on the March 2011 Current Population Survey figures for the aged 18 and older non-institutionalized population living in U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

For more details on Gallup's polling methodology, visit www.gallup.com.

Get Articles in Related Topics:


Gallup http://www.gallup.com/poll/154478/Gallup-Seasonally-Adjusted-Unemployment-Rate-April.aspx
Gallup World Headquarters, 901 F Street, Washington, D.C., 20001, U.S.A
+1 202.715.3030