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Seasonally Adjusted Unemployment Rates for Metros Now Available!

August 31, 2012

Now, some might argue that the headline above doesn’t really deserve an exclamation point, but the staff here at KCeconomy is pretty excited about this development. Here’s why.
Employment data fluctuates due to seasonal hiring patterns. Typically, the unemployment rate declines in late fall as retailers hire temporary workers for the holidays, and rises when those workers are laid off in January. We normally see the unemployment rate decline again as hiring picks back up between January and May, then spike in June when recent graduates enter the workforce and students look for summer jobs.
So without adjustment, when we see a decline in the May unemployment rate we can’t really tell how much of it is due to seasonal factors and how much might be because the employment situation is truly improving. The Bureau of Labor Statistics has long provided seasonally adjusted data at the national level, but not for metropolitan areas.
As the chart below shows, seasonally adjusted data is less volatile, but more telling. A change in the seasonally adjusted unemployment rate from one month to the next really tells us something about the region’s employment situation.

Another benefit of seasonally adjusted data for metros is it that we can now directly compare how we’re doing here in the Kansas City area to the most commonly cited national unemployment rate. The chart below tracks both the national and regional unemployment rates since 2008, and shows that we’re generally doing a bit better than the nation as a whole.

We’ve been able to show comparisons before using two different sources — the Current Population Survey at the national level and Local Area Unemployment Statistics for the metro — but with one seasonally adjusted and one not, that’s like comparing apples and oranges. We’ve tried to compensate by using Current Employment Statistics (CES) data, but that’s like throwing strawberries into the mix. The CES data measures jobs, using a survey of employers that counts non-farm payroll jobs, while CPS/LAUS data measures the labor force — the total number of workers and unemployed persons.
With all these different fruits in our data blender, we’ve had some confusion. Employment (workers) might be going up while employment (jobs) goes down, or vice versa. In the past, we couldn’t tell whether the worker number was really going up or whether it was a seasonal change – we could only guess by looking at past years. Now that both are seasonally adjusted, we can tell for sure when the two measures of employment are in agreement and when they really are telling conflicting stories.
This won’t help us resolve the conflict when it arises, but it will tell us when we really need to dig more to try to understand what the data are saying.
Who wants a smoothie?

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