Seasonal factors belie unemployment rate

April 17, 2012 at 4:47 PM
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PRINCETON, N.J., April 17 (UPI) -- Researchers at Gallup in New Jersey said the unemployment rate may turn higher by the end of April on a seasonally adjusted basis.

Without a seasonal adjustment, interviews with 31,283 adults conducted by the polling firm indicate the unemployment rate fell from 8.4 percent to 8.2 percent from mid-March to mid-April.

A seasonal adjustment of 0.3 percentage points, which is likely to be used by the Labor Department, however, puts Gallup's mid-April unemployment rate at 8.5 percent, up from the seasonally adjusted unemployment rate of 8.1 percent in mid-March.

This could mean the recently accelerated downward trend in the official unemployment rate may be over and may even turn upward by the end of the month, Gallup said.

The weather may be responsible. With such a mild winter, seasonal hiring that generally takes place in the spring occurred much earlier than normal this year.

That means, the unemployment rate fell quickly in recent months, it might be said, on false premises.

The official unemployment rate for March is 8.2 percent, down from 9.7 percent in April 2011.

However, Gallup said, the seasonally adjusted estimate would end up with an 8.5 percent unemployment rate at the end of April, which is "much higher than the 7.9 percent seasonally adjusted monthly low for Gallup's U.S. unemployment rate, seen in January of this year."

If the recent trend holds, "it could also indicate a significant reversal in the recent downward trend of the government's seasonally adjusted unemployment rate," Gallup said.

That is because seasonal adjustments eventually come out in the wash -- by the end of 12 months, they always return to breaking even.

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