The BLS reports payroll employment rises by 254,000 in September. I discuss two reasons the report is suspect.
Jobs vs Employment
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, and I have been discussing the divergence since then.
Job Stats vs One Year Ago
- Nonfarm Payrolls: +2,438,000
- Employment: +314,000
- Full Time Employment: -485,000
Job Stats vs Two Years Ago
- Nonfarm Payrolls: +5,569,000
- Employment: +3,135,000
- Full Time Employment: +1,042,000
In the last year, nonfarm payrolls are up by 2.4 million while employment is only up by 314,000 and full-time employment is down by 485,000.
Job Report Details
- Nonfarm Payroll: +254,000 to 159,105,000 – Establishment Survey
- Civilian Non-institutional Population: +224,000 to 269,080,000
- Civilian Labor Force: +150,000 to 168,699,000 – Household Survey
- Participation Rate: +0.0 to 62.7% – Household Survey
- Employment: +430,000 to 161,864,000 – Household Survey
- Unemployment: -281,000 to 6,834,000- Household Survey
- Baseline Unemployment Rate: -0.1 to 4.1% – Household Survey
- Not in Labor Force: +75,000 to 100,381 – Household Survey
- U-6 unemployment: -0.2 to 7.7% – Household Survey
Nonfarm Payroll Change by Sector
Government and Health Services are related to the surge of illegal immigrants and the need to address them.
Monthly Change in Nonfarm Payrolls
Monthly Revisions
- The change in total nonfarm payroll employment for July was revised up by 55,000, from +89,000 to +144,000
- The change for August was revised up by 17,000, from +142,000 to +159,000.
- With these revisions, employment in July and August combined is 72,000 higher than previously reported.
Nearly every month there are negative revisions. Today we have rare positive revision.
Part-Time Jobs
- Involuntary Part-Time Work: -206,000 to 4,624,000
- Voluntary Part-Time Work: +5,000 to 22,566,000
- Total Full-Time Work: +414,000 to 133,660,000
- Total Part-Time Work: -95,000 to 28,161,000
- Multiple Job Holders: +121,000 to 8,659,000
The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.
It’s important to not that multiple jobs are additive to nonfarm payrolls but not the number of employed.
Hours and Wages
This data is frequently revised.
- Average weekly hours of all private employees fell 0.1 hour to 34.2 hours.
- Average weekly hours of all private service-providing employees fell 0.1 hour to 33.1 hours.
- Average weekly hours of manufacturers was flat 40.0 hours.
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 Earnings
This data is also frequently revised. Here are the numbers as reported this month.
Average Hourly Earnings of All Nonfarm Workers rose $0.13 to $35.36. A year ago the average wage was $34.01. That’s a gain of 4.0%.
Average hourly earnings of Production and Nonsupervisory Workers rose $0.08 to $30.33. A year ago the average wage was $29.18. That’s a gain of 3.9%.
Year-over-year wages are keeping up with year-over-year inflation after underperforming for many months.
Unemployment Rate
The unemployment rate hit a 50-year low in January and April of 2023 at 3.4 percent. It’s now 4.1 percent.
“The unemployment rate has bottomed this cycle and will generally head higher.”
I first made that comment many months ago. If there was any doubt, it’s now erased.
Alternative Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
- The official unemployment rate is 4.1 percent.
- U-6 is much higher at 7.7 percent.
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 Model
Starting January 2014, I dropped the Birth/Death Model 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.
Birth-Death Methodology Explained
I gave a detailed explanation of the model and why the hype is wrong in my June 8, 2024 post How Much Did the BLS Birth-Death Adjustment Pad the May Jobs Report?
I repeat, do not subtract the birth-death number from the headline number. That’s flawed.
However, it is now clear that the BLS is too optimistic about the number of jobs they believe are being created by the net creation of new businesses.
A Breakdown, by Sector, of the Negative 818,000 BLS Job Revisions
On August 22, 2024 I gave A Breakdown, by Sector, of the Negative 818,000 BLS Job Revisions
Those negative revisions are a direct result of the BLS Birth-Death model gone haywire.
Household Survey vs. Payroll Survey
- The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on employer reporting.
- The household survey is a phone survey conducted by the BLS. It measures employment, unemployment and 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 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.
Recent Economic Data
September 30: Housing Starts Are Tumbling as Completions Soar, It’s Very Recessionary
October 1: Job Quits Drop Again, Well Below Pre-Covid Levels
October 1: ISM Manufacturing Contracts 6th Month, 22nd Time in 23 Months
Final Thoughts
This was the strongest payroll report in months. But people taking second jobs added 121,000 to the headline number.
Also, the report is suspect. On August 22 I noted A Breakdown, by Sector, of the Negative 818,000 BLS Job Revisions
The BLS Birth-Death model has gone haywire resulting in mammoth negative revisions.
And yesterday, ADP data shows Small Businesses Reducing Workers for the Last Five Months
In addition to a flawed birth-death model, I strongly suspect the BLS is oversampling large employers or underweighting small businesses. See above link for details.
An article in “marketwatch” from August 29, recruiters and career coaches said there is an increase in hiring that happens at the start of each fall, dubbed the September Surge. The article then recounts several recruiters postulations why it occurs. And typically another hiring bump happens in January, as recruiting staff come back from the holidays with new annual budgets.
Knowledge of this occurrence was certainly known to the Fed. They had a small window to lower rates, so they went big.
http://www.marketwatch.com/story/the-annual-september-surge-in-hiring-is-coming-can-it-really-help-you-find-a-job-0c8fb15f
U-6 number is officially at 7.7%, double or triple your closer to the real UNEMPLOYMENT number..
Yes. There are 30mm+ unwilling unemployed running around the US. They quietly bear their extra foam latte everyday with no thought of revolt.
some people (Mish and YOU) cannot read data, patterns or make money. They have to look for why the Dow, the S&P, the BEA etc etc all got it wrong.
unprecedented number of “government” jobs added… one month before an election… pushing UE rate down to 4.1%, instead of EU rising to 4.5% which would trigger the Sahm/recession signal… yes, it’s all so very convenient.
yeah, it’s all data & patterns… got it.
https://www.zerohedge.com/economics/behind-todays-stunning-jobs-report-record-surge-government-workers
Schools reopening!!!!!
EVERYTHING has rebounded and been more resilient thanYOU and the other astrologers, sorry, economists “predicted.”Then again, when you bend all your “analysis” to fit your political agenda, it’s not surprising that you have repeatedly got stocks, bond and even Tesla repeatedly WRONG.
Maybe you should stop this gig and get an actual job with accountability in that booming job market….
I think Mish calls them as he sees them.
ok. He just sees wrongly, and often.
Somebody drinking the COO-AID from the Marxist controlled media???.
The boomer front end approach 80%. Their homeownership approach 80%. One bedroom is taken by an “assistant nurse” 24hr/7days/week. Their income is low. Many are invisible to BLS. They drive owner cars, do the shopping, escort the walker. Health service, leisure and hospitality are leading the charge. GDP is rising thanks to the dying boomers. Gov #3 and construction is #4, though gov is a higher low, below last year.
Right. Everything is really bad except for the 35 factors that are going well…
Multiply by 1000.
There are over 100 million people who are not in the labor force.
Let’s assume that the latest BLS reported numbers are a bit fake or the total number was pushed up by government hires and subsidies. Bond yields are up to 3.97%p.a. and FED has no excuse to cut by 50bp. Faking numbers is doing more harm to majority of consumers (voters) and real economy.
Powell is a genius, I tell ya!
That 50 bps rate cut worked like a charm.
Always, the headline number is always NOMINAL never REAL.
Buy the Rumor sell the News will stand in perpetuity.
The BLS have to appease the Harris/Biden regime for the upcoming election. Just like the Fed had to do with the rate cut. I would not be surprised if both are revised/reversed shortly after the election.
Did anyone really think the employment number was not going to look good? The revisions will come in Dec. Depending on who is elected they will be revised down or up. So many of the Federal agencies are corrupt.
Right. And the record S&P earnings are also being faked for the election.
if you’ve been calling recession for 2+years and it didn’t show, then it’s time to admit that the problem is you, not the data. The author of this blog has admitted that he has been wrong about markets for the last two decades.
ok, that’s called being wrong, period. No excuses.
Full employment is rising to a higher low from 1.8M down to 1.2M down to
They’re all lying to you! hahaha
Next month the final vote : Europe might impose 10%-45% tariffs on Chinese cars in the next 5 years in order to stop the flood.
Since Labor was the only place that Fed was counting on to stabilize inflation, that leaves them out of Luck.
People will be experiencing continuity in price rises, not the slackening touted by media.
Hitting people in their wallets just before an election, not such a smart idea.
Thanks Jerry for another Fed over reach.
Markets overdid the selling on USD couple weeks ago looking for substantial cuts.
Not appearing promising at this juncture.
EURO/USD took out September lows quite handily today.
One caveat. The chart on sector employment growth makes it sound like all the hiring in, for example, health & education was dependent on immigration. That’s not really accurate. Most of the public safety net hospitals, the ones that bear the brunt of the demand, aren’t adding much headcount since they are fairly pressed for cash. Most of the increase is just general demand since we’re getting older really fast (me especially).
There’s definitely an immigration impact, but it’s not really known how big (or small). Healthcare is also such a big portion of the economy, you should expect a large number for growth there. It’s also more acyclical. I could see the argument being more true for education, but since 2014 payrolls in local education grew by roughly 0.3-0.4% annually, so it doesn’t seem like it’s hugely impact in terms of a long term growth rate.
Seems like personal politics creeping into one’s economics. Maybe there’s some data to back it up, and honestly I’ve not looked super deep into it beyond some basic data snooping. On the surface, there’s at least reason to be skeptical.
Amen BT. I keep harping on 5000 boomers dying each day (note they all need care as they are dying) and another 10,000 retiring each day. Throw in all the obesity, diabetes, clogged arteries, etc and the bump up in healthcare workers is all about aging boomers over immigrants.
Most of the immigrants are young and healthy anyway, heck most walk thousands of miles to cross the border. Get anyone in America to try and do that and they’ll drop dead after a few dozen miles.
Boomers pay insurance premiums. Illegals do not but can not be turned away by Hospitals.
Premiums are set for BIG increases and those paying for Biden Harris Largess are not going to take it kindly.
Premiums skyrocketing was a foregone conclusion from 80 million people using healthcare even without any immigrants.
There is a vicious spiral here that people can’t or won’t comprehend.
Medicare is dependent on people paying into the system.
If you do not have enough young people paying into the system where do you think the money will come from?
That’s bad enough but now add 80m people using healthcare and paying subsidized premiums and the problem is readily visible.
The immigrants are literally a drop in the bucket of what is being spent on the ‘pacific ocean’ of social security and medicare spend.
If you would stop making up excuses to cover for the criminal activities of illegals breaking US immigration Law as first step into US, then you would have more credibility.
Biden Harris have decided US Law does not apply to them.
Traitor Mayorkas does the implementing.
People in Storm affected areas will take notice.
People in storm affected areas won’t be voting, sorry but that’s reality. And I’m not making excuses for anyone, just pointing out reality. Get ready for 8 more years of Harris.
Storm areas will be showing the rest of South East just what Biden Harris have in store for them.
Just read report at Zerohedge that FEMA is preventing help from coming to area.
Hope this is not true, for if it is, it is very serious matter.
A very serious matter that MPO thinks is fantastic because he thinks it benefits team blue. Sad.
Your estimate is likely a little low,
“More than 11,200 Americans will turn 65 every day — or over 4.1 million every year — from 2024 through 2027, according to estimates from the Retirement Income Institute at the Alliance for Lifetime Income.”
The baby boom peaked from ’57 to ’59, then dropped off until ’64. The last of them has two more years before early SS is even an option.
It’s a sea of humanity that will all have their hands out screaming for more. Already seen a few people complain about SS COLA at 2% so there will be many more howls coming.
Don’t exaggerate. Typical Americans would die way before two dozen miles. Wings and NFL yum yum.
We are losing 5K/day, or 1.8M/Y. In 2020/2021 we lost 2M impaired boomers within 3 weeks instead of 30 years. Are we losing more than during covid.
The losses are insufficient.
“The BLS reports payroll employment rises by 254,000 in September. I discuss two reasons the report is suspect.”
We’re 30 days out from the most important election in my lifetime. Nobody should trust anything coming out the current administration, whether it’s Comrade Kamala, JPowell the BLS, et al.
The entire System is in hyperdrive to get Harris elected.
IF the number is correct, it adds fuel to the fire for the narrative that the Fed is more worried about interest expense than they are inflation. Employment is OBVIOUSLY taking care of itself with Uncle Sam spends an extra $2T this FY.
The other day, Mish wrote an article about how 3 studies confirmed that tariffs ALWAYS lead to higher consumer prices. Well hell, just this morning, John Carney with Breitbart Business referenced a NBER study from 2018-19 that said:
“many companies absorbed the costs of tariffs rather than passing them on to consumers”
Breitbart Business Digest: The Smoot-Hawley Myth and the Real Stakes of Trump’s Tariff Proposals
Touche!
Powell is a Republican hired by a Republican. Are you accusing him of being a Trump traitor?
BTW: Powell has a net worth between $20-55 million!
In DC, even the Republicans are democrats. Powell doesn’t want Trump because Trump (stupidly) bad-mouthed him. That being said, I think Powell took the actions he thought were best. Also Powell is not motivated by greed at his age – it’s about his reputation.
Thanks Mish! Great analysis as always
Poor Jerry with egg on his face. Interesting to see if the algo options complex drops indices as everyone scrambles for more protection over the weekend for the Ayatollah IDF Show.
When will you factor in the permanent disabilities caused by the COVID mRNA bioweapons? Follow Edward Dowd, former hedge fund manager. The excess mortality and permanent disabilities track COVID shot deployment to such a statistical degree that no other explanation is possible.
You need to consider all impacts caused by the administration.
FEMA spent over $1B on housing illegals, so hospitality sector also getting massive stumulus from government overspending. Inorganic and unsustainable, artificially boosting job and GDP growth.
Those positive reports are always suspicious.
How many of these jobs are due to recently arrived immigrants?
I watched a video about Haitians in PA. One guy just moved here this year under the emergency asylum program. He makes about $9 an hour working at a factory and because his wage is so low he qualifies for food stamps and cash assistance.
Are you sure it was a factory? That’s sound like behavior at Walmart which has been known to have most employees on government assistance and that was way before Haitian immigrants.
https://www.youtube.com/watch?v=6pbNH9zaQEM
Yes, factory worker. He shows his pay stub which says ‘110.7 units’ being paid $1213.23 ($10.95 per hr.) but 30 of those hours are overtime, so I guesstimate his base wage is about $9 an hour.
Meanwhile, two factories employing American citizens closed down in Charleroi (Quality Pasta & Corning) this year.
Get more Haitians to Charleroi then, they work cheap so maybe the plant will be profitable.
Funny that the last jobs report weeks before the election are suddenly optimistic strong and positive unlike all the recent negative reports. What a strange coincidence.
The fed cut so hiring was expected to go up, that had more to do with it than anything else, we’re also heading into holiday season, that will be the real tell on this economy. Will the Grinch steal Christmas?
This funny video explains it well.
https://www.youtube.com/watch?v=gG0x7u86hGo
This was September job report – how could hiring have started before the rate hike even was decided ? Plus nothing in business happens that fast.
The CIA has assured us that conspiracies do not exist.
Socialism is becoming clearer and clearer with each passing day.
If we keep printing money and remain the worlds reserve currency, they will come.
Lol. Field of Fed Dreams. I like it. Will all the dead bankers come back to life to play?
Shut up and go out and vote Harris-Walz, then find a bridge to hide under.
The decline in hours worked partly offsets the drop in unemployment rate.
No improvement in Unemployed > 27 weeks, nor part-time for economic reasons.
Employed full-time is slightly better but still down year-over-year (recession signal).
We won’t see the aftereffects of Helene until next month’s report.
The real question is what does this do to the Fed’s plan for further rate cuts? I long suspected that a rate cut would juice the market, lower borrowing costs make it easier to hire people.
All this bodes well for Harris and bad for Trump, 31 days till election.
Yawn, the 10 year is up 25 bps since they cut rates. Find a new grift
How are those teslas holding up? Tesla stock?
Yeah. If you cut the Fed funds rate and the long bond yields go up, it’s an indication that the Fed is doing something wrong. Really wrong.
362 days until Jimmy Carter turns 101.
Ineffective as President, but seems to be a pretty nice guy.
Anyone who is voting made up their mind months ago, if not years ago.
Raise rates!
What? No more “doom and gloom” reports?
I am shocked.
I’ve been investing in “boom and gloom” but now it feels like “boom and boom”