Hello Economists, the Strong Jobs Gains Are Not At All What They Seem

October 7, 2022

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5:29 pm

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Payroll and employment data from the BLS, chart by Mish

Today, the Bureau of Labor Statistics released its monthly payroll report. The unemployment rate fell 0.2 percent to 3.5 percent.

However, the jobs strength and employment strength are two different things. Today, I added “full time” employment, shown above, to my ongoing chart.

Payrolls vs Employment Since March 2022

Nonfarm Payrolls: +2,162,000
Employment Level: +478,000
Full Time Employment: -57,000

Household Survey vs. Payroll Survey

The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on a subset of employer reporting.

The household survey is a phone survey conducted by the BLS. It measures unemployment and full vs part time status.

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. Instead, you are no longer in the work force.

Increasing Divergence

Nonfarm payrolls are a subset of all jobs, but generally the numbers move in the same direction over time.

The Employment (Household Survey) is noisy. However, 7 months is a reasonable time frame for discrepancies to resolve.

Since March of 2022, payrolls are up about 2.2 million but full time employment is down by 57 thousand.

That means all of the employment rise (and then some) since March is part-time employment.

Unemployment Rate

Today the unemployment rate fell to 3.5 percent matching its record low because people dropped out of the labor force and employment rose.

Jobs Market Remains Tight as Unemployment Rate Dips to 3.5 Percent in September

For more on today’s jobs report including wage growth, hours worked, and job sector analysis, please see Jobs Market Remains Tight as Unemployment Rate Dips to 3.5 Percent in September

Since March, these reports have been a tale of two headlines, seemingly at odds: strong jobs but weak employment.

Expect a Long But Shallow Recession With Minimal Job Losses

Given hiring pressures and boomer retirements, Expect a Long But Shallow Recession With Minimal Job Losses

The stock market is another issue. For discussion, please see Artificial Wealth vs GDP: Why Earnings and the Stock Market Will Get Crushed

While I expect the unemployment rate will not rise much in this recession, it’s another thing for the unemployment rate to decline and jobs to rise by millions.

Job Openings Decline by Over a Million, But What Does It Mean?

Job openings decline but from record levels. Let’s discuss the implications.

In case you missed it, please see Job Openings Decline by Over a Million, But What Does It Mean?

This post originated at MishTalk.Com

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Scott Maze

3 years ago

If one believes “They” want a new CBDC as Bretton woods fails, Then one believes there will be a MUCH bigger drop in the employment charts like the little gray box period above here. But obviously it will be a BIG BIG gray box thingy, and that the employment lines go really REALLY REALLY low. Remember all the Russia chatter b4 the invasion. NOW PAY ATTENTION to all the nukes chatter right now. Because it is coming soon. The Black swan is going to be tactical. And it wont be the Federal Reserves fault. And I believe the New Bretton Woods is nearly decided. And the new CBDC will be used exclusively in the trade of oil natural gas and all natural resources. And those guys have already decided. And “They” don’t want anymore of our funny money for those resources. I believe “They” want a new CBDC. Cause that’s all the chatter. Timing… my guess…. we take out the march 2020 lows in this first wave down from Dec 2021. Then a Face ripping 61.8% rally as the Fed pivots. THEN… some Tactical nukes usher in the Black Swan. We take out almost all of the stock market gains back to the Bretton woods 2 time frame… and they roll your $1million dollar 401k into a new CBDC account after tax at a Fair Market value of $10k. which now buys a Comifornia approve real beef hamburger. Praying I’m wrong… but if there is to be a new CBDC then our US dollar must fail. And that’s how I’d do it if i was them.

JeffD

3 years ago

Jobs tied to self-driving cars are falling. I guess what was supposed to be “the future” was all hype, after all.

spasidechats

3 years ago

We have the best economy after factoring in our F is not nearly as bad as everyone else’s F. Big difference between a 60% and a say 39%. We also have the resources to improve the score if we wanted (we won’t) but why should we? We are the best right now.

As for employment, it’s like housing markets. Some areas are absolutely horrible but some are doing exceptionally well. Only way we go into a hardcore recession is if those gas prices crank up. If it starts getting in the 7-8 dollar mark across the board we will have to finally get our 60% up to maybe a C -.

Doug78

3 years ago

A bridge not too far.

PapaDave

3 years ago

OT: Munich Re to cease investing in or insuring new oil and gas fields from April 2023

“Specifically, the carrier has committed to no longer invest in or insure contracts / projects exclusively covering the planning, financing, construction, or operation of the following:

New oil and gas fields, whereas at the end of December 2022 no prior production has occurred
New midstream infrastructure related to oil, which have not yet been under construction or operation as of December 31st, 2022
New oil fired power plants, which have not yet been under construction or operation as of December 31st, 2022”

Now insurers are beginning to abandon oil and gas companies (along with many pensions, sovereign wealth funds, large investors, and lenders). Which only makes it more difficult for oil and gas companies to expand production and further restricts future supply. Better for these companies to just produce what they have already found and run down their reserves. Of course, this will put longer term upward pressure on prices, as demand continues to grow.

You can’t make this stuff up. But you can take advantage of it. Like invest in low cost producers who already have long reserves. They are going to be puking cash.

vanderlyn

3 years ago

Reply to PapaDave

thanks papa D. you are the best. this is both inflationary and a great arbitrage for chaps like us. i might start drilling in my backyard, in brooklyn, soon.

PapaDave

3 years ago

Reply to vanderlyn

Lol!

Just talking my book.

But you are correct. If you are worried about inflation, this is a great area to invest in. A lot of today’s high inflation is a result of high oil prices.

If you are worried about high interest rates, that won’t hurt these companies directly if they are paying down their debt or even debt free. And many of them won’t need to borrow in the future.

If you are worried about a slowdown or recession, it is not going to hurt these companies. Energy demand grows even during recessions. It takes a very deep recession to actually cut demand.

If you think we will experience a deep recession which cuts demand, everything will get hurt, but companies with fortress balance sheets will still do the best.

And if you are like me, and see upward pressure on oil and gas prices for the rest of this decade, these companies provide a once in a lifetime opportunity to benefit from the energy transition that is happening.

Next up: I am slowly building small positions in a variety of renewable and hydrogen companies. I am expecting governments to provide favorable conditions for these companies for many decades to come.

vanderlyn

3 years ago

Reply to PapaDave

please keep posting your ideas and picks. i am loving rising rates………..and agree with your past and future thesis.

Zardoz

3 years ago

Reply to PapaDave

… yet somehow they still make billions in profits. Most curious…

PapaDave

3 years ago

Reply to Zardoz

Insurers rarely lose money. And when they do, they simply raise rates. They are price makers. Whereas oil and gas firms are price takers. Just like farmers and other commodity producers.

8dots

3 years ago

Hello DIA weekly for fun & entertainment : the battle of ma200 cont. Last week it closed below, this week above. The blue whales sent the market down to check supply. DIA built a huge selling tail on lower volume. If Sept 26 close hold DIA should rise above ma50 and breach 346.

Avery

3 years ago

Why knock one’s self out working if the nukes will be flying soon?

Jim Morrison philosophy: I want to have my kicks before the whole shithouse goes up in flames.

Zardoz

3 years ago

Reply to Avery

Read Alas Babylon as a young teen and reached the same conclusion, leading to an all out bender that lasted 15 years. At the end, Armageddon never materialized, and all I had to show for it was 70k of debt.

The Apocalypse is always late.

JackWebb

3 years ago

Xiden pats self on the back for “strong employment,” while the markets see the same and figure it’ll keep the Fed tightening. No one other than you, Mish, seems to want to look under the hood.

Zardoz

3 years ago

Would be interesting to see a “number of persons employed” series, separate of payroll, so we could know how many people are on multiple payrolls.

Bam_Man

3 years ago

Reply to Zardoz

The decline in the Labor Force Participation Rate is a tip-off that many of the jobs added are additional part-time jobs taken on by those already working.

vanderlyn

3 years ago

Reply to Bam_Man

seems to by these numbers and also talking to dozens of people in all walks of life, asking them how economy is doing for them, anyone who wants a job has one. and some folks really love working more than one job. and many people who don’t have to work anymore are not doing that, too. it is NOT a recession. it’s a post lock down inflationary boom and the nature of work has changed from offices to homes. the restaurants and construction sites and truck drivers…………all have jobs that want them. not even close to a recession. i thought 6 months ago we might go stagflation but i was wrong. no stag. just inflation. this is akin to the late 1940s inflationary boom from lockdown of world war. economically speaking. our lockdown in 2020 was movies, peloton and jeffrey toobin on zoom. not the ww2 battle of the bulge my uncles and dad…………dealt with.

JRM

3 years ago

Reply to vanderlyn

Just cause your “BUBBLE” is doing “WELL” doesn’t translate to the rest of the bubbles!!!!

Majority of people working two jobs, is not because they “ENJOY IT” it is because of “FINANCIAL REASONS”!!!!!

Zardoz

3 years ago

Reply to vanderlyn

Hey! Don’t you minimize Covid PTSD. There are a few here still working through the trauma!

8dots

3 years ago

The gov pay to make love, for labor and leisure. In mfg : employees labor for 40 hours x $28/hr = $1.1K/per week x 52 weeks ==> $57K/y. The big red leisure and hospitality will shrink and shift to mfg. If the republican take the house big red #2 will increase it’s negativity. Taxes gov collect will grow.

The winner : Biden.

Captain Ahab

3 years ago

Reply to 8dots

The logic : unexplained

Tony Bennett

3 years ago

Consumer credit blow out (August)

expected … $25 billion

actual … $32 billion

revolving portion (credit card) … $21 billion … grew +18.1% (annual rate)

How long can j6p keep this up????

Six000mileyear

3 years ago

Reply to Tony Bennett

Does a bill paid in full does count toward that number. My monthly bills have gone up by at least that amount, but I pay everything off.

Zardoz

3 years ago

Reply to Tony Bennett

Once they hit their limits, a lot just pay off a bit and then charge it back up, blissfully unaware of what that 18% interest is costing them. Had to practically scream that knowledge into my wife before I married her, and she’s fairly smart. The average lackwit will never catch on.

Salmo Trutta

3 years ago

N-gDp is about to fall – while the FED is tightening. It’s a policy mistake.

Tony Bennett

3 years ago

Bloomberg on Census Bureau Household Pulse Survey:

“Almost half of US families surveyed by the Census Bureau found the recent rise in consumer prices “very stressful” — and the vast majority of the others were also worried about inflation.”

https://www.bloomberg.com/news/articles/2022-10-06/inflation-is-very-stressful-for-about-half-of-us-households?sref=eo0IIyEe

Tony Bennett

3 years ago

Report will keep Federal Reserve on its tightening path.

$US having a good day.

MPO45

3 years ago

Reply to Tony Bennett

More T-bills coming right up next week.

vanderlyn

3 years ago

Reply to Tony Bennett

i’ve had zero doubt the FED was not serious past year, considering the inflation rates after lockdowns and printing affects………….on pricing and jobs…………

Hello Economists, the Strong Jobs Gains Are Not At All What They Seem

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