Jack Dunn - Reclaiming Common Sense

 One of the untold stories of the past ten years has been the changes in the Multiple Job Holder workforce.  We Jobs Report Friday is an important day for the stock market and for the economy. The headline number is either the seasonally adjusted private sector "jobs" number or the seasonally adjusted "non-farm payroll" number. The number quoted comes from the Current Employment Statistics (CES) data and measures the number of workers gained or lost each month. This number can double count people who are working two jobs.A second number that receives headlines is the unemployment rate. The U-3 Unemployment rate comes from the Current Population Survey data. The CPS data includes information on full-time jobs and part-time jobs as well as the number of unemployed people and the number of people in the workforce population.


We have to watch the revisions to the prior months data. plural. The CES data has advance, preliminary, and "final" versions. Sometimes the final data is revised months or years later. If the data from last month is revised down, this will give a lower starting point and a big bump this month. Conversely, if the June data is revised upward then the current month's data is muted. It is best to compare the data from the current value and the trend values, not just one or the other. We also have to manage expectations. The Forecast Column projected Full-time jobs gains, Part-time job losses, a potential increase in the level of unemployed workers, especially after yesterday's weekly claims report, and both spiking unempoyment and participation rates, all non-seasonally adjusted.


There were 205,000 seasonally adjusted Private sector workers added during July. There are two numbers that are often conflated: the non-farm payroll and the total private sector worker numbers, The Current Employment Statistics data measures workers.This was within expectations. The problem here is that the seasonally adjusted data was fully revised going back beyond what was reported in this column. Even the NSA CES data from 2015, 2016, and 2017 was revised. It makes the prep work unrecognizable.


The Worker data for May was revised.  This data revisions was inconsequential compared to the overall revisions to the seasonally adjusted data from prior years.


The seasonal factor was skewed higher than the past two years and lower than it could have been. The growth rate was comparable to 2016. The seasonal factors were comparable to 2016. Some people were expecting a growth of 170,000-180,000  Will future revisions pop the growth from 0.09% to 0.10%? Will that change the seasonal factors?


The Trend is our Friend - and We are Trending Better than 2016 and Comparable to 2012. If the data from the prior months is compiled the trend is to add jobs faster than 2016 and comparable to 2012. This is important to not because those were election years.The Annual growth rate is comparable to where we were during July 2011 when we were heading towards the February high of over 2.5%. We are also doing well compared to May 2016. We saw over 2% annual growth through February 2017.


The Current Population Survey Jobs Data indicated that the Jobs Market is in transition. If you look at the data we did not add as many full-time jobs as we could have added. We also did not lose as many part-time jobs as we could have lost . The net jobs gain was one of the best net gains since 2003.There were 385,000 net jobs added this July compared to 390,000 during 2006, 357,000 added during 2007, and more than were added during 2008 through 2015.It was a slower July than July 2016 - an election year.


The Number of unemployed workers was record higher and reported only slightly higher. This was not a surprise based on the continuing claims data.  The thing that is important to understand is that while this is the lowest level of unemployment since July 2002, the effective unemployment rate is much higher than is being reported.


The workforce participation rate for July was up for the second straight July. This is important. The narrative has been that we are seeing participation drop as people retire. That is not true, as has been detailed in many "Red, Gray, and Blue" articles. We many be seeing people re-entering the workforce. The unadjusted workforce participation rate came up to 63.46%. This is higher than it was during July 2015 and higher than tit was during July 2016.


Wages improved  - they will improve faster when workforce participation improves. We are seeing people seeking work. If employers have a larger selection from which to hire those wages may not improve as much as anticipated. Conversely, if wages improve more people may be seduced back to work.


There are many more ways to look at the data. This column will continue writing articles on the jobs report through next week. The problem with most analysis is that the analysts are coming unemployment rates from different months and seasons after they have been seasonally adjusted. We need to compare jobs created, changes in unemployment, and participation rates of the four prior two term Presidents and President Trump after 6 months. It will calculate the U-7 unemployment rate which factors in participation. Another article will examine how men and women are doing in the current job market. Another article will examine the changes in employment, unemployment, population, and participation by age group. One of the untold stories of the past ten years has been the changes in the Multiple Job Holder workforce. Last Month we had a record June  level of people working two part-time jobs. Another article will look at the changes in people working two part-time jobs, two full-time jobs, and people working a part-time job and a full-time job. Another article will examine the sector data. Multiple sectors have not recovered from the Great Recession.


It's the economy.