Jack Dunn - Reclaiming Common Sense

 We should see Participation Rise, Unemployment Fall, and Jobs Created

February is a Jobs Growth Month -  as are March, April, May, June, and July. While it may seem obvious that if we see employment improve we should see unemployment drop, it may not be so obvious that if we see unemployment fall that we could see participation unchanged. If a person is employed or unemployed they are participants. They could shift from an unemployed participant to an employed participant and they would still be a participant.  We lost workers during the Month of February only during  February 2008 and 2009 since 2003.Last February, during a cooling job market, we added over 1 million jobs, including 676,000 part-time jobs, NSA. We have added rough half a million jobs, or more,  each February since 2011.

We normally lose seasonally adjusted jobs during February. This has not been reported because "everyone" reports the official CES SA Data. WE lost seasonally adjusted jobs during President Obama's jobs streak on a regular basis. Will this be the year that people start reporting the SA CPS data instead of the SA CES data?

The Unemployment number should decline. We normally see unemployment levels drop during February. Yesterday's unemployment claims report revealed that the First-time Unemployment Claims level is significantly lower than the mid-January number and that the Continuing claims number is lower than mid-January.

January tends to be the low for Participation and the seasonal peak for unemployment. This means that the participation rate should rise even as the unemployment rate falls. Last month's participation rate was bogus due to a downward revision to the workforce population.

The CPS Jobs Seasonal Factors are all over the place. The tables at the end of this article details the month to month changes in FT, PT, and Unemployed workers and the hodgepodge of seasonal factors used.

Expect an official Jobs number at or above 250,000 workers. Question anything under 100,000. Keep your eyes on this column for the post jobs report articles on the official numbers, the dual job market, the market for men and women, and sector data as well as data by age group.

It's the economy.

Will Politics come into Play with the February Jobs Report?

The Jobs Report is normally released the first Friday of the month. The February Jobs Report will be released next Friday, the second Friday of the month. This jobs report will be the first jobs report where the data was collected after President Trump's inauguration. The data from last month was skewed high by the seasonal factors used. Last month we lost 555,000 non-seasonally adjusted (NSA) Full-time (FT jobs and  716,000 NSA Part-time (PT) jobs. These are the Current Population Survey (CPS) numbers. The Current Employment Statistics (CES) data is used for the White House as the basis for the Private Sector Job Streak that they used to tout. That data was skewed higher than it should have been last month. If the data from January 2017 was seasonally adjusted  using the seasonal factor from January 2016 the data would have been reported at 147,000 instead of 237,000. Either way the private sector shed 1.95% of its workforce during January - better than usual. The skewing of the data was persistent and consistent last year, as was detailed in the January Jobs Forecast column. The question is whether or not the authors of the February Jobs Report, and future jobs reports, will treat President Trump as kindly as they did President Obama.

We Should Add a Huge Amount of Jobs and Workers this month. The CES data measure workers while the CPS data measures jobs and the unemployed. February we add workers. We have added private sector workers every February since 1993 except February 2009. The past six years we have seen growth rates between 0.27% and 0.50%. We are starting with 121.124 million workers. This means that if we grow at a rate similar to what we saw during 2011-2016 that we will report between 79,000 private sector workers and 358,000 private sector workers. That is a gigantic range. That is only part of the CES story.

Will the authors of the report create a record low seasonal factor to skew the number lower than it should be? Last year's seasonal factor was a record low. The question hear is what is an appropriate seasonal factor and what is an appropriate projected level of growth?If the 2016 factor was inappropriate then let's base growth on the 2011 rate and hope that they use the 2015 seasonal factor. If that is the case then a 0.41% growth rate, based on optimism in the market after the election, then we could see a Private Sector number of 250,000 workers reported.