Preview of Feb 2012 Unemployment Rate

On March 9th, 2012 the Bureau of Labor Statistics (BLS) will release the February Unemployment rate at 8:30am EST.  Regardless of the reported seasonally adjusted U-3 Unemployment Rate, the more important focus should be on the number of jobs created in the private sector and the U-6 unemployment rate and some of the other underlying metrics.

The BLS defines the U-3 rate, sometimes called the headline rate of unemployment as workers seeking jobs in the last four weeks. The U-6 rate, sometimes called the underutilization rate includes the U-3 rate plus workers who have taken part-time jobs because they can’t find full-time employment plus workers who are discouraged from seeking jobs. More of this can be found in an article I wrote in 2009 Redefining the unemployment rate.

The January U-3 rate was reported at 8.3%. The rate peaked at 10% in October 2009.  The January U-6 rate was reported at 15.1% after peaking at 17.1% in October 2009.

As reported by Yahoo finance, the consensus for the March report is 8.3% and job creation is estimated between 206k to 250k.

The phrase “unemployment rate is a lagging indicator” usually refers to the fact of job seekers becoming more confident of finding a job after the economy begins to grow and more jobs are available. As this happens the unemployment rate can actually increase because more job seekers are being counted into the U-3 rate as they more actively seek employment.

Therefore focusing on net job creation in the private sector and the U-6 rate are more important than the U-3 rate.

Copyright ©2012 Mark Shore. Contact the author for permission for republication at [email protected] www.shorecapmgmt.com Mark Shore publishes research, consults on alternative investments and conducts educational workshops. Mark Shore is also an Adjunct Professor at DePaul University’s Kellstadt Graduate School of Business in Chicago where he teaches a managed futures/ global macro course.