Nonfarm Payrolls Rise by 139,000 Employment Declines by 696,000

Can anyone believe these reports anymore?

Initial Thoughts

Assuming one believes the data, we have a huge surge in employment starting December of 2024 as data from ADP weakens.

That trend continues today with ADP reporting 37,000 private jobs and the BLS reporting 140,000 private jobs.

Job Report Details

• Nonfarm Payroll: +139,000 to 159,561,000 – Establishment Survey
• Civilian Non-institutional Population: +188,000 to 273,385,000
• Civilian Labor Force: -625,000 to 170,510,000 – Household Survey
• Participation Rate: -0.2 to 62.4% – Household Survey
• Employment: -696,000 to 163,273,000 – Household Survey
• Unemployment: +71,000 to 7,237,000 – Household Survey
• Baseline Unemployment Rate: +0.0 to 4.2% – Household Survey
• Not in Labor Force: +813,000 to 102,088,000 – Household Survey
• U-6 unemployment: +0.0 to 7.8% – Household Survey

Nonfarm Payrolls Change by Sector

These are generally low-paying jobs. Everything else is very weak. I suspect churn and double-counting.

Monthly Change in Nonfarm Payrolls

Monthly Revisions

• The change in total nonfarm payroll employment for March was revised down by 65,000, from +185,000 to +120,000.
• The change for April was revised down by 30,000, from +177,000 to +147,000.
• With these revisions, employment in March and April combined is 95,000 lower than previously reported.

Revisions went the expected way. More negative revisions are on the way.

Part-Time Jobs

• Involuntary Part-Time Work: -66,000 to 4,624,000
• Voluntary Part-Time Work: -135,000 to 22,588,000
• Total Full-Time Work: -377,000 to 134,830,000
• Total Part-Time Work: +33,000 to 28,557,000
• Multiple Job Holders: -283,000 to 8,583,000

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.

Hours and Wages

This data is frequently revised.

• Average weekly hours of all private employees was flat at 34.3 hours.
• Average weekly hours of all private service-providing employees declined by 0.1 hours to 33.2 hours.
• Average weekly hours of manufacturers rose 0.1 hours to 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 $0.15 to $36.24. A year ago the average wage was $34.89. That’s a gain of 3.9%.

Average hourly earnings of Production and Nonsupervisory Workers rose $0.12 to $31.18. A year ago the average wage was $29.97. That’s a gain of 3.9%.

Unemployment Rate

The Unemployment Rate has been between 4.0 percent and 4.2 percent for 13 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 4.2 percent.
• U-6 is much higher at 7.8 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.

Final Thoughts

Despite all the work I put into these reports, all of the BLS monthly data is total garbage.

I do the best with BLS data that I can, or anyone can.

The quarterly QCEW and Business Employment (BED)reports represent a 96 percent sample. But those reports lag by about 5 months.

As expected, the latest QCEW report does not confirm these numbers. I will cover that separately.

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