Unemployment date shows expected seasonal distortion

SALEM – Last week’s data for Ohio unemployment is completely dominated by what George Zeller calls a “gigantic level of seasonal distortion” that appears in the data every year during January.

Every 12 months the level of new unemployment claims soars dramatically. That is because there are more layoffs during the post-holiday period than there are at any other time – both during recessions and economic recoveries – said Zeller, an economic research analyst in Cleveland and a 1967 Salem High School graduate.

Because of that, new unemployment claims decline dramatically and the annual distortion explains all of the patterns seen in the new update.

Zeller’s data tracks employment losses in Ohio because it is directly associated with payroll earnings losses and also cause declines in other measures of the business cycle, notably revenues generated by tax streams at various levels of government.

The income tax and the sales tax are particularly subject to trends in the business cycle. Therefore a determination economic indicators: job and earnings trends that update of the point at which the impact of the 2000s recession finally disappears in Ohio’s labor market is an extremely important issue, he said.

Last week, the number of Ohio’s seven multi-county urban regions showing a “job growth” level of new unemployment claims for the second week in January rose to four, including Canton, Youngstown-Warren, Dayton-Springfield, and Cleveland-Akron-Lorain-Elyria.

Despite the improvement from the massive seasonal distortion, the other three Ohio urban regions still have elevated “job destruction” levels of new unemployment claims and include Cincinnati, Toledo, and Columbus.

Columbus had the highest elevated level of current new unemployment claims among Ohio’s urban regions.

Zeller explained that during the second week of January, “a highly negative streak of 19 consecutive months” of elevated new unemployment claims at elevated “job destruction” levels came to an end.

“This would appear to be an extremely positive development, but the improvement was entirely caused by the annual seasonal distortion in the data during January,” he said, noting that it wasn’t related to an improved labor market.

But, Zeller said, “The data were clearly positive … while nationwide (it) was also positive albeit highly distorted and unusual this week.”

By comparison, 2008, 2009, 2011, and 2012 enormous levels of seasonal layoffs in January produced “job growth” levels of new unemployment claims that were not elevated.

In those years, it became clear in the February data that the apparent improvements in January were simply “false positive” readings and did not measure labor market improvements.

The same is true this year, he said as the figures “are also heavily distorted by the same “false positive” problem,” he explained while adding the data tells little because of the seasonal distortion.

New layoff data shows only 17 of Ohio’s 88 counties had elevated “job destruction” readings, an improvement of 10 counties in comparison to last week.

At the same time, 71 counties reached a more favorable “job growth” low level of new unemployment claims and is similar to the largely positive but also heavily seasonally distorted data released by the U.S. Bureau of Labor Statistics.

The bottom line is the numbers do not indicate that job destruction from the 2000s recession has ended, a major aim of tracking the data.

“Whether that job destruction has ended will not be known until the annual period of massive early winter seasonal distortion ends,” Zeller said of the recent numbers.

Zeller said that for technical reasons related to federal government shutdown in October, there is no clear, unambiguous, and definite sign in the level of new unemployment claims that Ohio’s very slow recovery from the 2000s recession has moved into a desperately needed vigorous recovery, as a result of ongoing continual job destruction within the state.

In the Mahoning Valley, new unemployment claims remained favorable last week, Zeller said, but pointed out the Youngstown-Warren area fell to the sixth highest and second lowest elevated level of new unemployment claims among the seven multi-county urban regions in the state.

That current Youngstown-Warren reading is well into the “job growth” range at -22.5 percent, below Youngstown-Warren’s January 1999 level and -19.3 percent below the January 2000 level in Youngstown-Warren.

The level of new claims is currently at a “job growth” level that is not elevated in all three Mahoning Valley counties. Overall, Youngstown-Warren has Ohio’s second lowest current level of new unemployment claims. Youngstown-Warren is particularly subject to annual seasonal distortion from the automobile industry every year in August and also the currently appearing major January distortion.