This past Friday we received the September Employment Situation Report, or Jobs Report. The numbers were crazy. We added roughly one million seasonally adjusted, and non-seasonally adjusted, jobs last month while we lost non-seasonally adjusted, and seasonally adjusted , private sector workers. We saw unemployment fall and participation rise from August levels.
How did we get data where up is down and down is up? The data that is often quoted is the "non-farm payroll (NFP)" number. The NFP number includes government workers. The number of government workers increased through the recession and started to decline during 2009 whereas the peak for jobs was recorded during July 2007. This column regularly discusses the changes in sectors. The article "September Government Worker Super Surge (Part 1)" detailed the month to month changes and the year to year changes from September to September. Professional and Business Services (PBS,) Leisure and Hospitality (LAH,) and Trade, Transportation and Utilities (TTU) are the three sectors that have expanded the most since the recession. We still have not returned to pre-recession levels of workers, non-seasonally adjusted, in the Mining, Construction, Manufacturing, or Information and Technology (IT) Super Sectors.
The problem is that the government likes to compare apples to apples. They seasonally adjust virtually every piece of data that they release. When seasonally adjusted data is compared to other seasonally adjusted data, with different seasonal factors, FACTs (False Assertions Considered to be True) are created. These seasonal factors change from month to month, year to year, and Super Sector to Super Sector.
Did we actually add seasonally adjusted workers last month? The seasonal factors appear to have been adjusted to accommodate the changing economy. There are basically five ways that the data was augmented:
Four Sectors - Including Government - Saw Massive Data Adjustments. Did we add seven government workers or 1.037 million workers? The data indicates that the TTU Sector could have added 250,000 SA CES workers added. Education and Health Services could have reported the addition of another 250,000 workers. Conversely the Leisure and hospitality super sector could have reported nearly 700,000 workers lost.
Mining and Logging, Construction, and Manufacturing were three Sectors that could have gone either way. Here the data indicates that construction and Manufacturing could have reported 25,000 to 50,000 workers lost in each sector and a minor gain or loss in the mining sector.
Information Technology and "Other Services" were going to lose Workers. If you look at the seasonal factors used since 2009 for the month of September these seasonally adjusted numbers were going to fall. IT has suffered for an extended period of time.
The Professional and Business Service and Financial Services Sectors have shown strength and could have shown weakness. The seasonal adjustments were relatively minor compared to the adjustments made to the (LAH) and Government data.
When the various combinations and permutations are made it was possible for a huge upward worker number to be posted. The potential for a million new government jobs being reported as being added to the economy is certainly a reason why the private sector number was referenced by the prior administration. If the seasonal factors for last year were to have been used then we could have lost even more workers. We lost 700,000 private sector jobs last month, monthly in the Leisure and Hospitality Sector. We added a million government workers. The number one Super Sector (Manufacturing) during 1981 is now this fifth largest sector. The fifth largest sector during 1981 (Trade, Transportation, and Utilities) is now the largest Super Sector. These changes "caused" the seasonal factors to be changed. The net takeaway is that this report was solid and could have been reported even better than it was reported.
It's the economy.
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