Government to the rescue?
Initial Thoughts
Last month ADP reported 37,000 private jobs and the BLS reporting 140,000 private jobs. This month ADP reports -33,000 jobs with the BLS at 74,000 private payrolls.
The unemployment rate declined because the labor force shrank by 130,000 after dropping by 625,000 last month.
Those not in the labor force rose by 813,000 last month and and another 329,000 this month.
Does anyone believe these reports?
Job Report Details
- Nonfarm Payroll: +147,000 to 159,724,000 – Establishment Survey
- Civilian Non-institutional Population: +200,000 to 273,585,000
- Civilian Labor Force: -625,000 to 170,380,000 – Household Survey
- Participation Rate: -0.1 to 62.3% – Household Survey
- Employment:+93,000 to 163,366,000 – Household Survey
- Unemployment: -222,000 to 7,015,000 – Household Survey
- Baseline Unemployment Rate: -0.1 to 4.1% – Household Survey
- Not in Labor Force: +329,000 to 103,204,000 – Household Survey
- U-6 unemployment: +0.1 to 7.7% – Household Survey
Nonfarm Payrolls Change by Sector
Employment in government rose by 73,000 in June. State government added 47,000 jobs, largely in education (+40,000). Employment in local government education continued to trend up (+23,000). Federal government employment continued to decline in June (-7,000) and is down by 69,000 since reaching a peak in January.
Monthly Change in Nonfarm Payrolls
Monthly Revisions
- The change in total nonfarm payroll employment for April was revised up by 11,000, from +147,000 to +158,000.
- The change for May was revised up by 5,000, from +139,000 to +144,000.
- With these revisions, employment in April and May combined is 16,000 higher than previously reported.
Part-Time Jobs
- Involuntary Part-Time Work: -159,000 to 4,465,000
- Voluntary Part-Time Work: -32,000 to 22,556,000
- Total Full-Time Work: +437,000 to 135,277,000
- Total Part-Time Work: -367,000 to 28,190,000
- Multiple Job Holders: +282,000 to 8,865,000
The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.
Note that multiple job holders add to nonfarm payrolls but not the number of employed.
Last month multiple jobholders declined by 283,000. This month they rose by 282,000.
Hours and Wages
This data is frequently revised.
- Average weekly hours of all private employees declined by 0.1 hour to 34.2 hours.
- Average weekly hours of all private service-providing employees declined by 0.1 hours to 33.1 hours.
- Average weekly hours of manufacturers was steady at 40.1 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 $0.08to $36.30. A year ago the average wage was $35.00. That’s a gain of 3.7%.
Average hourly earnings of Production and Nonsupervisory Workers rose $0.09 to $31.24. A year ago the average wage was $30.07. That’s a gain of 3.9%.
Unemployment Rate
The Unemployment Rate has been between 4.0 percent and 4.2 percent for 14 straight months.
Do we credit Biden, Trump, the Fed, or the BLS?
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.
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.
The BLS payroll reports smack of oversampling large employers and undersampling small employers where jobs have been trending lower.
ADP vs BLS
Yesterday, I noted Winners and Losers by Job Type in the June ADP Payroll Report
ADP had manufacturing jobs up by 15,000. Is that believable?
I suspect not. This is what happens when extrapolating small sample sizes.
However, the overall ADP numbers do seem to make sense. I noted ADP Reports 33,000 Job Losses in June with Negative Revisions in May
Small and medium-sized businesses shed jobs in June.
QCEW Report Shows Overstatement of Jobs
On June 16, I commented QCEW Report Shows Overstatement of Jobs by the BLS is Increasing
The discrepancy between QCEW and the BLS jobs report is rising.
Final Thoughts
The BLS monthly data is total garbage. I do the best I can with BLS data.
A close look at ADP data shows its reports leave a lot to be desired as well.
The quarterly QCEW and Business Employment (BED)reports represent a 96 percent sample. But those reports lag by about 5 months.
“Does anyone believe these reports?”
I can’t refute them based on local data.
There are a couple overpriced houses that are not selling, but that isn’t relevant to labor reports.
“Those not in the labor force rose by 813,000 last month and another 329,000 this month.”
The rate of increase in disability increased significantly starting with the roll out of the Fauci jab in early 2021, and continues at that same sharper angle ever since:
https://fred.stlouisfed.org/series/LNU00074597
“Consistent job gains and rising wages are modestly helping the housing market,” says Lawrence Yun, chief economist for NAR. “Hourly wages are increasing faster than home prices. …”
Today’s nonfarm payrolls report seems to back Yun’s position.
Any data available regarding how ICE employment is affecting the Jobs numbers? I wonder how many job losses are being offset by ICE hires. Check out all the open job listings for ICE.
https://www.usajobs.gov/Search/?a=HSBB&show=dep&k=Immigration%20and%20Customs%20Enforcement
Mish stated:
“The Unemployment Rate has been between 4.0 percent and 4.2 percent for 14 straight months.
Do we credit Biden, Trump, the Fed, or the BLS?”
What if we changed that comparison to report even better results:
The Unemployment Rate has been between 3.4 and 4.2 percent for 42 straight months – since the end of 2021 (from Mish’s graph)
That can’t be Trump; he’s only been in since January.
Why would it be the BLS? If their numbers were really wrong, we would have found out in the last 3.5 years.
Could have been Biden and the Congressional Democratic policies after COVID. But it doesn’t matter since they are gone or irrelevant for now.
Or it could be the Fed’s policies (under Trump’s original pick Powell) that fought off the huge COVID unemployment and then achieved good/low unemployment for 3.5 years straight
With the current gap between job openings and unemployed, it would be hard to envision a recession. There has never been a recession with the spread this large.
Once again, I would be very careful believing any economic numbers originating from the current group in dc.
If the BLS is partisan Democrat they have every incentive to make Trump look bad. And yet the numbers they put out do not.
I’m still going with the argument that peak retirement is making a mess of the statistics.
– Government to the rescue? > Or is it: Taxpayers to the rescue?
>> Last month ADP reported blah, blah, blah, and the BLS reporting blah, blah, blah…
– Does anyone believe these reports? > I obviously don’t. Who has an “Agenda” to make them look a certain way? Don’t forget about “Revisions” and which way that might take it depending… unsure about too many things, to believe them, as Politics alone, requires an “Agenda” It’s at a whole new level now though…
– Do we credit Biden? > Nope
– Do we credit Trump? > Nope
– Do we credit the Fed? > Nope
– Do we credit the BLS? > Nope
> I see nobody deserving of “Credit” I see some perhaps that are not doing there jobs. Maybe all of them? Credit? Nope!
– The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers. > Anybody that “Wants / Desires” Credit, then fix the issues above this sentence. That’s how you get credit, for Action, and Results. Who gives us that of late in Politics? I rest my case…
DXY might turn up next week, after SPX reached a barb wire fence. Happy 4th.
The jobs numbers do not support an interest rate cut yet. In a few real estate markets it would help but for the majority of the nation, Interest rates are appropriate.
I would not be surprised to see the bond market take rates higher after July 9th.
Steve Liesman told us about state and local gov hiring. Construction is still up. When healthcare, edu, leisure and hospitality shrink, in a systemic change, while the private sector takes over the US econ will boom.
And all those receiving medicaid going back to work to receive their benefits? think again Congress Is Pushing for a Medicaid Work Requirement. Here’s What Happened When Georgia Tried It.
GOP lawmakers want to nationalize Medicaid work requirements to offset Trump’s proposed tax cuts. Yet Georgia’s example shows that this could threaten health care for nearly 16 million Americans and cost taxpayers hundreds of millions of dollars.
https://www.propublica.org/article/georgia-medicaid-work-requirement-big-beautiful-bill?
Grand Theatre – Liquidity is the factor for markets; not jobs. Jobs are just a sideshow. Job stats only go down after their is already a recession and declared a year later by government officals. How fast money be earned or borrowed and move through the system to the money making companies is the key. It would seem to me banks would have a better method for jobs stats, but that will never be shared with the public. I think the “L” should be applied to BLS and should be Doged.
Are the government ones rehires from the DOGE debacle?
The jobs numbers are worse than useless. I periodically send out resumes but that hardly counts as “seeking employment”. Zero interviews, and if i was granted one, my chances of employment (currently semi-self employed and otherwise retired) are next to nil. Should I be counted in the ‘actively seeking employment” category? There is a huge cohort in my situation, some of which is counted, many of which are not. I think (without evidence) that the stat tab that is most meaningful would be over 50 unemployed involuntarily. White collar work is being decimated and it ain’t comin back. I don’t think the economy is prepared for that, as the tax base continues to shrink and the deficit continues to grow.
How long until the only one hiring is the government?