by Mish

Initial Reaction

The big news is in employment where the three-month trend worsened.

In the last three months, employment has only risen by a grand total of 33,000. Employment in January declined by 30,000. For the entire year, employment rose by only 1,548,000. The average increase from a year ago is only 129,000 per month.

These trends have now gone on long enough they should not be ignored. But they are.

Instead, media is gaga over the beat-the-street headline number of +227,000 jobs.

Revisions

Last month, the BLS revised the increase in November jobs vs. October to 204,000 from 178,000. This month, the BLS revised the increase in November jobs from October all the way down to 164,000.

In the past two months, the BLS revised the increase in October jobs vs. September from 161,000 to 142,000 to 135,000. The BLS revised the October increase a third time this month down to 124,000 from the originally reported 161,000.

On the positive side, the BLS revised the increase in September jobs vs. August from 208,000 to 249,000.

Let’s dive into the details in the BLS Employment Situation Summary, unofficially called the Jobs Report.

BLS Jobs Statistics at a Glance

  • Nonfarm Payroll: +227,000 – Establishment Survey
  • Employment: -30,000 – Household Survey
  • Unemployment: +106,000 – Household Survey
  • Involuntary Part-Time Work: +242,000 – Household Survey
  • Voluntary Part-Time Work: +236,000 – Household Survey
  • Baseline Unemployment Rate: +0.1 to 4.8% – Household Survey
  • U-6 unemployment: +0.2 to 9.4% – Household Survey
  • Civilian Non-institutional Population: -660,000
  • Civilian Labor Force: +76,000 – Household Survey
  • Not in Labor Force: +264,000 – Household Survey
  • Participation Rate: +0.2 to 62.9 – Household Survey

Employment Report Statement

Total nonfarm payroll employment increased by 227,000 in January, and the unemployment rate was little changed at 4.8 percent. Job gains occurred in retail trade, construction, and financial activities.

Unemployment Rate – Seasonally Adjusted

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Nonfarm Employment Change from Previous Month

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Nonfarm Employment Change from Previous Month by Job Type

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Hours and Wages

Average weekly hours of all private employees was steady at 34.3 hours. Average weekly hours of all private service-providing employees was steady at 33.3 hours. Average weekly hours of manufacturers rose 0.1 hours to 40.8 hours.

Average hourly earnings of private workers rose $0.04 to $21.84. Average hourly earnings of private service-providing employees rose $0.04 to $21.63. Average hourly earnings of manufacturers rose $0.01 to $20.65.

For discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?

Birth Death Model

Starting January 2014, I dropped the Birth/Death Model charts from this report. 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. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.

Table 15 BLS Alternate Measures of Unemployment

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Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said “better” approximation not to be confused with “good” approximation.

The official unemployment rate is 4.8%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 9.4%. 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. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.

Strength is Relative

It’s important to put the jobs numbers into proper perspective.

  1. In the household survey, if you work as little as 1 hour a week, even selling trinkets on EBay, you are considered employed.
  2. In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
  3. In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.

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.

Looking for jobs on Monster 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.

Final Thoughts

This report was shockingly bad. Employment growth was +129,000 on average from a year ago, +79,000 per month since March, and only +11,000 per month for the last three months.

Employment has stalled.

Mike “Mish” Shedlock

Solid Jobs Report but Divergence Between Jobs and Employment is Still Strong

Today’s employment report shows a robust increase of 235,000 jobs. And for the first time in many months, the rest of the report was good as well.

Unemployment Rate 4.6%; Establishment Survey Jobs +178,000; Household Survey Employment 160,000

Initial Reaction Today’s employment report shows an increase of 178,000 jobs.

Payroll Jobs +215,000, Unemployment Rate Ticks Up to 5.0% as More People Enter Labor Force

Initial Reaction Today’s employment report shows an increase of 215,000 jobs, very close to the Bloomberg consensus estimate of 210,000 jobs.

For Last 3 Months, Job Growth Averaged 165K, Employment Only 62K

Today’s employment report shows an increase of 156,000 jobs. The BLS revised revised November employment to 204,000. from 178,000. The BLS revised October lower a second time. Last month The BLS lowered October from +161,000 to +142,000. This month the BLS took October down again to +135,000.

November Jobs +228,000: Employment Only +57,000

The number of nonfarm jobs in November increased by 228K. The household survey says employment increased by only 57K.

Another Wild Jobs Report: Payroll Employment Rose a Disappointing 20,000

The BLS gave us another wild jobs report. Unemployment fell to a new low for the cycle but the jobs gain was only 20K.

Revisions Save an Overhyped Employment Report as Jobs Rise by 134,000

Some expected 300,000 or more jobs in today's report. Instead, payrolls rose by 134,000. Revisions substantial.

Examining the Discrepancy Between Jobs and Employment

In the past year, the BLS says the number of jobs rose by 2.62 million. Employment rose by 1.429 million.

Wild Job Fluctuations Again: Payrolls Rose by 196K but Employment Fell by 200K

The wild ride in job reports continues, this time to the upside with the unemployment unchanged but employment down.