Earlier today I noted The Jobs Report Much Is Weaker Than It Looks For Six Months
I have been commenting on the jobs (Establishment Nonfarm Payrolls) vs employment (Household Survey) discrepancy for four months. The two surveys measure different things. A person is either employed or not, but someone can have multiple jobs.
Generally the numbers move in the same direction over time. The Household Survey is noisy, but 6 months is a reasonable time frame for discrepancies to resolve.
If you assume both surveys are correct, then the interpretation is that the strength in jobs since March is due to 1.6 to 2.0 million people taking extra part-time jobs.
The only other explanation is that one of the surveys is flat out wrong.
This report is a further attempt to explain the discrepancy.
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.
Employment Level vs Sum of Full and Part Time Employment
- Because of the way the BLS makes seasonal adjustment, the sum of full time and part time jobs does not match the total employment level.
- However, those discrepancies are random and swing equally in both directions monthly by +-250,000. That is not the source of a consistent one-way discrepancy between the trends.
Full Time and Part Time Employment
March 2022 Employment vs Jobs
- Full Time: 132,718,000
- Part Time: 25,902,000
- Sum of Full and Part Time: 158,620
- Nonfarm Payrolls: 150,856,000
August 2022 Employment vs Jobs
- Full Time: 132,335,000
- Part Time: 26,237,000
- Sum of Full and Part Time: 158,572,000
- Nonfarm Payrolls: 152,744,000
March to August Change
- Full Time: -383,000
- Part Time: +335,000
- Sum of Full and Part Time: -48,000
- Nonfarm Payrolls: +1,888,000
March to August Key Points
The economy added 1,888,000 jobs while full time employment declined by 383,000 and total employment (as measured by sum of full and part time) was down by 48,000.
The total discrepancy between the trends is 1,888,000 + 48,000 = 1,936,000
Nonfarm Payrolls and Employment Level
You get slightly different number if you compare the employment level to nonfarm payrolls (instead of the sum of full and part time employment) as I did above.
The latter method shows a surplus of 1.614 million jobs vs employment gains whereas the sum of parts method has a 1.936 million discrepancy.
A likely explanation for the divergences is boomer retirements coupled with approximately 2 million people taking extra part time jobs to make ends meet due to high inflation.
No matter what the explanation, if the Household and BLS Jobs reports are both reasonably accurate, the highly touted jobs boom is dramatically overstated in any practical sense, especially real consumer spending.
Don't anticipate strong spending based on strong jobs because the data suggests this is a mirage of part-time job strength (as little as one extra 8-hour shift, or less).
This post originated at MishTalk.Com
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