Seasonal Adjustments Likely to Boost Friday’s Job Numbers

The Econoday consensus estimate for Friday’s jobs report is 1,675,000. The range is a whopping 200,000 to 2,400,000,

Seasonal Adjustments

The lead chart shows the unadjusted education totals. When the BLS seasonally adjusts the numbers it looks like this.

Calculated Risk explains the charts in his post State and Local Government Education Employment will Increase Sharply in July, Seasonally Adjusted

In the current school year (red), educators were let go earlier than usual due to the pandemic, with layoffs starting in March. It appears another 350 thousand or more educators will be let go in July NSA. 

Since there is a regular seasonal pattern, the BLS adjusts the hiring so the typical school year hiring and layoffs, Seasonally Adjusted (SA), is mostly flat.

However, in the 2019-2020 school year, layoffs started much earlier. Now, in July, the red line will have to come back close to zero after the seasonal adjustment. This would suggest about 850 thousand jobs added in July SA.

Auto Sector

On a smaller scale we may seem the same in the auto sector which often shuts down in July but did not do so this year.

Census Workers

2020 Census Paid Temporary Workers will also boost employment, even more so seasonally-adjusted.

Continued State Unemployment Claims

The BLS reference week for the household survey unemployment rate is the week that contains the 13th of the month.

Last month the reference week showed 19,231,000 continued claims. For July, there were 16,951,000.

That does not impact the establishment survey jobs number, but all of these things impact the “official” unemployment rate.

This is a big of a mess and on top of it all, the BLS admits survey errors.

Mish