(Click on image to enlarge)
Nonfarm payrolls and employment levels from the BLS, chart by Mish.From September 2020 through early 2022, nonfarm payroll job gains and full time employment changes tracked together.Starting around March of 2022, a divergence between employment and jobs became very noticeable.Payrolls vs Employment Gains Since March 2023
Payrolls vs Employment Gains Since May 2022
Payrolls are up by 5.77 million since May of 2022, but full time employment up only 457 thousand. No amount of BLS smoothing can possibly hide this.Revisions were massive in January. I will comment more in my final thoughts.Job Report Details
Nonfarm Payroll Change by Sector(Click on image to enlarge)
Government and Health Services are related to the surge of illegal immigrants and the need to address them. Social assistance jobs rose by 30,000 in January.Change in Nonfarm Payrolls January 2022 to January 2024(Click on image to enlarge)
Monthly Revisions
Those are the normal monthly revisions. I covered annual revisions separately and will discuss in final thoughts below.Part-Time Jobs
The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.Hours and WagesThis data is frequently revised.
An overall decline or rise of a tenth of an hour does not sound line much, but with employment over 160 million, it’s more significant than it appears at first glance.Hourly EarningsThis data is also frequently revised. Here are the numbers as reported this month. rose $0.19 to $34.55. A year ago the average wage was $32.92. That’s a gain of 4.48%. rose $0.13 to $29.66. A year ago the average wage was $28.31. That’s a gain of 4.77%.Year-over-year wages are keeping up with inflation after underperforming for many months.Unemployment Rate(Click on image to enlarge)
BLS unemployment data, chart by MishThe unemployment rate hit a 50-year low in January and April of 3.4 percent. It hit 3.8 percent in August, September, and October, the highest since January of 2022, but is now back to 3.7 percent.Alternative Measures of Unemployment(Click on image to enlarge)
Table A-15 Alternative Measures of Labor, chart from BLS is where one can find a better approximation of what the unemployment rate really is.The official unemployment rate is 3.7%.U-6 is much higher at 7.2%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.Some of those dropping out of the labor force retired because they wanted to retire. Some dropped out over Covid fears and never returned. Still others took advantage of a strong stock market and retired early.The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers.Birth Death ModelStarting January 2014, I dropped the charts from this report.The birth-death model pertains to the birth and death of corporations not individuals except by implication.For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid.The model is wrong at economic turning points and is also heavily revised and thus essentially useless.Birth-Death Methodology ExplainedEvery month this subject comes up. I gave a detailed explanation of the model and why the hype is wrong in my December 8, 2023 post The month does not matter. If you think the model has a big impact, please click on the above link for why it doesn’t.Household Survey vs. Payroll Survey
If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.Looking for job openings on Jooble or Monster or in the want ads does not count as “looking for a job”. You need an actual interview or send out a resume.These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.Employment Revisions to December 2023(Click on image to enlarge)
Whereas the BLS revised Jobs for December by +333,000, the BLS revised employment for December by -270,000.Final ThoughtsThis report is much worse than headline numbers indicates. I said the same last month and it’s generally been that way for over a year.Last month I commented “A decline in full time employment of 1.5 million is remarkable. This series is heavily revised so let’s see what January brings.” We now have an answer. Other than the headline jobs numbers, this report was terrible. There are 353,000 more jobs, but hours worked took an unusual dive.The continued dependence on government jobs, up another 52,000 in December and 36,000 in January also masks weakness.The annual revisions were also bleak, lowering employment in December by 270,000. Employment fell again in January.Ignore the Amazing Headline Job Numbers, Note the Revisions(Click on image to enlarge)
Today’s headline number was 353,000 jobs vs Bloomberg consensus expectations of 170,000.And the BLS revised November up from 216,000 to 333,000. So this was a massive beat the street headline number.The key take away is the discrepancy between employment and jobs.Payrolls are up by 5.77 million since May of 2022, but full time employment up only 457 thousand (lead chart).Can Both Numbers Be Reasonably Correct?The answer is yes (discounting measurement error) because they measure different things. A person working three part time jobs counts for three jobs but only a single person employed.I have repeatedly asked ADP to account for duplicate social security numbers but they won’t. Amusingly, the BLS wants to, but the employees tell me they can’t because “they don’t have access to the data for security reasons.”This is a simple sort-merge program but alas, we depend on a phone survey for employment numbers.Notably, discrepancies like these don’t last for years unless there is some truth to the employment numbers because measurement errors are random.Earlier today, I stated Ignore the
Every year, the BLS makes major adjustments to the data then does not revise history. The charade puts a constant spectacle on monthly job reports.
Payrolls have increased by over 5 million vs full time employment over the past 20 months. No amount of BLS smoothing can hide the discrepancy.More By This Author:Ignore The Amazing Headline Job Numbers, Note The Revisions ISM Manufacturing Still Contracting But New Orders Turn PositiveAmusing Pavlov’s Dog Market Response To The Fed’s Perceived Message
