Our standard monthly employment report typically provides various employment statistics for the Fourth District and its major metropolitan areas. This month we take a different tack, as the District's November employment numbers varied widely from our expectations. The Fourth District's unemployment rate dropped sharply in November, falling to 5.2 percent from 5.7 percent in the previous month. Meanwhile, the national unemployment rate held relatively steady until December, when it saw a substantial increase of 0.3 percent. However, we are cautious about interpreting the large drop in the District's unemployment rate as a sign of an improving labor market.
For one thing, the drop in the district's unemployment rate is more likely the result of an atypical calendar and its effect on the way the data are reported than on something in the labor market.
First, Thanksgiving fell very early this year and may have caused retailers to move their seasonal hiring up further in the month than in recent years. Second, in response to the early Thanksgiving holiday, the Labor Department and Census Bureau moved the "reference week" for the Current Population Survey--a key input into the estimation of state and county unemployment rates--to the week of November 4-10. The reference week is the week in a month during which individuals are asked about their employment status; normally, this is the week that contains the 12th of the month. The change in the reference week this month may have influenced November's state-level statistics. Finally, the change of the reference week, combined with the early Thanksgiving, may have introduced more noise into the seasonal-adjustment process that is applied to remove from the data any seasonally-induced swings in the labor force, employment, and unemployment series.
A look at state-level unemployment rates supports this idea. November's declines were completely reversed in December in Fourth District states. …