Initial Reaction
Today’s employment report shows a robust increase of 227,000 jobs. The good news stops there. The rest of the report was horrific.
The big news is in employment where the three-month trend worsened.
In the last three months, employment has only risen by a grand total of 33,000. Employment in January declined by 30,000. For the entire year, employment rose by only 1,548,000. The average increase from a year ago is only 129,000 per month.
These trends have now gone on long enough they should not be ignored. But they are.
Instead, media is gaga over the beat-the-street headline number of +227,000 jobs.
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Last month the BLS revised revised November employment to 204,000 from 178,000. This month the BLS revised November from 204,000 to 164,000. In the past two months the BLS revised October lower each month, from 161,000 to 142,000 to 135,000. The BLS revised October a third time. October now sits at 124,000. This month the BLS revised September up from 208,000 to 249,000.
Let’s dive into the details in the BLS Employment Situation Summary, unofficially called the Jobs Report.
BLS Jobs Statistics at a Glance
- Nonfarm Payroll: +227,000 – Establishment Survey
- Employment: -30,000 – Household Survey
- Unemployment: +106,000 – Household Survey
- Involuntary Part-Time Work: +242,000 – Household Survey
- Voluntary Part-Time Work: +236,000 – Household Survey
- Baseline Unemployment Rate: +0.1 to 4.8% – Household Survey
- U-6 unemployment: +0.2 to 9.4% – Household Survey
- Civilian Non-institutional Population: -660,000
- Civilian Labor Force: +76,000 – Household Survey
- Not in Labor Force: +264,000 – Household Survey
- Participation Rate: +0.2 to 62.9 – Household Survey
Employment Report Statement
Total nonfarm payroll employment increased by 227,000 in January, and the unemployment rate was little changed at 4.8 percent. Job gains occurred in retail trade, construction, and financial activities.
Unemployment Rate – Seasonally Adjusted
Nonfarm Employment Change from Previous Month
Nonfarm Employment Change from Previous Month by Job Type
Hours and Wages
Average weekly hours of all private employees was steady at 34.3 hours. Average weekly hours of all private service-providing employees was steady at 33.3 hours. Average weekly hours of manufacturers rose 0.1 hours to 40.8 hours.
Average hourly earnings of private workers rose $0.04 to $21.84. Average hourly earnings of private service-providing employees rose $0.04 to $21.63. Average hourly earnings of manufacturers rose $0.01 to $20.65.
For discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report. 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. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.
Table 15 BLS Alternate Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
Notice I said “better” approximation not to be confused with “good” approximation.
The official unemployment rate is 4.8%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 9.4%. 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. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.
Strength is Relative
It’s important to put the jobs numbers into proper perspective.
- In the household survey, if you work as little as 1 hour a week, even selling trinkets on EBay, you are considered employed.
- In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
- In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.
Household Survey vs. Payroll Survey
The payroll survey (sometimes called the establishment survey) is the headline jobs number, generally released the first Friday of every month. It is based on employer reporting.
The household survey is a phone survey conducted by the BLS. It measures unemployment and many other factors.
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 jobs on Monster 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.
Final Thoughts
This report was shockingly bad. Employment growth was +129,000 on average from a year ago, +79,000 per month since March, and only +11,000 per month for the last three months.
Employment has stalled.
So now that Trump is in office, the media is using the U6 stats. When Obama was in office the media never questioned using the U3 stats.
Hell, we probably have 20% unemployment.
Interesting how that works, isn’t it?
None of the government’s statistics for the last decade or two are honest. The new administration needs to go back and re-start & revise the basis on all of them to get a real picture of what is/has happened.
Commiecast must be looking for their bottom too. http://www.breitbart.com/big-government/2017/02/02/comcast-executives-immigration-backlash/?utm_source=facebook&utm_medium=social
by Karl Denninger
Employment: LIES, All LIES!
Wow, man, +227,000 employment screams the Bureau of Lies and Scams.
Uh huh. Sure.
Ok, ok, the ADP report was strong too. But if there’s something to take from this report and the market’s reaction (which was a bit muted) it’s short everything. The folks over in the Treasury pits didn’t seem to have trouble deciphering it, incidentally, as the /ZN was bid hard on the release.
Why?
Well, let’s look at a few things.
Look at the right side of that chart. That’s January, and the nice blue dashed line is (very) negative. Now to be fair this is common in January and in fact the surprise would be if you didn’t get a negative unadjusted household survey print.
But the unadjusted number this time around was pretty nasty. Negative 1.271 million nasty, to be precise. The last two years were -666 and -638, respectively. The last similar negative number to this one in a January was in 2013, which was -1.4m.
That drops the 12-month running rate to +1,490,000 jobs, from 2,095,000 — a big drop and the first time it’s been under 2m since October of 2015, and that was only for one month.
368,000 came back into the labor force. That’s positive — but (obviously) they didn’t all find jobs.
And the net-net run rate for jobs and new entrants into the workforce was -195,000 on a 12-month rolling basis.
What happened there?
Remember that this is the annual adjustment month — and magically, about 660,000 assumed labor-force entrants over the last 12 months disappeared when the labor force entrant rate was normed back against the annual census adjustment.
That, by the way, is unusual — the work-force number is usually adjusted upward, and typically quite a lot. Last year it was a bit over 400,000, the year prior about 700,000. It’s very uncommon for it to take a large negative adjustment; the last one was in 2011, and it was only about 100k.
What’s that all mean? Employment:population, the determining factor as to the health of the labor market, was down 4 ticks to 59.2%. This followed last month’s 3-tick decrease. A drop in this indicator in January is common but if it’s followed up with another one next month that would not be good at all.
The internals are interesting. Everyone lost ground on employment:population, but not unexpectedly in distribution. Seasonal firing (from stores, etc) dented young people and women more than older and men, which is the usual seasonal pattern — unless you’re black, in which case you actually gained on employment:population! So much for “a bunch of Trump racists will fire every black person in America”; they in fact did the opposite.
Oh, and as for U-6? It went up a lot — by a full percent, to 10.1 from 9.1 last month. Oops.
Do any of you know whether any of the public or private publishers of employment stats measure employment in the underground economy?
There are a helluva lot of guys who work off the books and I’d like to know if these guys count in the job stats-if not,I’d bet unemployment is north of 15%,maybe 20%.