Jack Dunn - Reclaiming Common Sense

Last month we had a rather anemic Jobs Report, or Employment Situation Report, that was released. What went underreported was that the Private Sector Worker number, the Current Employment Statistics (CES) data, Non-seasonally adjusted (NSA,) grew faster than it did during August of 2015 or August of 2016. It was also not reported elsewhere that this was the strongest first seven months of a President, with regard to the NSA CES data, since President Reagan. Last month women were working more full-time jobs than ever recorded. We also recorded the second highest ever level of people working two part-time jobs for the month of August. We also saw the highest level ever recorded of people working two full-time jobs for  the month August this past month. The sector data revealed that there were more workers working in ten of eleven super sectors this August compared to last August. Finally, the data provided indicates that older workers are working more jobs than ever. "August's Aging Workforce" details how those 55-74 years of age are working more jobs this August than any August since 2003.

September we normally worker reductions recorded and worker growth reported. The Seasonally Adjusted (SA) CES Private Sector worker number was the basis of President Obama's "Job Creation Streak." This column has written numerous articles on the fallacy of this streak.  The NSA CES data indicates that we have lost private sector workers every September since September of 1998. Note the huge spike of workers during September of 1983, highlighted in red.

Seasonal Factors Can Covert Worker Losses into Worker Gains. There has been a steady upward creep for the seasonal factor used to convert the NSA CES data to the reported SA CES data. It is also important to not that the number sometimes reported is the Non-Farm Payroll data which differs from the Private Sector Worker number in that it includes the government job while the private sector data does not.

If we grow (contract) as we have since 2010 then we will have the addition of 200,000 to 300,000 private sector workers reported this month. If we contract by 0.25 to 0.30% this month, and if we use the seasonal factor that was used during the past fourth Augusts then we could see the addition of  150,000 to 350,000 workers reported. Yes, down is up during the month of September.  This is where it is important to note that President Clinton during his eighth month in office (September of 1993) saw a spike in NSA CES workers. It is also important to note that this jobs report will include the impacts of Hurricane Harvey and not the impacts of Hurricane Irma or Hurricane Maria. It is very possible that we will see a surge in construction jobs as a result of the three hurricanes, both for reconstruction and new construction.

Watch the revisions and the seasonal factors used. If we see the data for August revised higher this will cause the September data to be reported lower than it would have been if the data was unchanged. Similarly, if the data from August is revised lower than originally reported then the September data will be reported higher than they would have without any revisions. Expect a number in the 216,000 to 242,000 range.

The Number of Full-time Jobs should be recorded as falling and the number of Part-time Jobs should be recorded as growing. We often see more part-time jobs added than full-time jobs lost during September. Could this lead to an elevated level of people working two jobs? Most likely. We often see a surge in dual jobs workers during September, October, and November. Prior to the recession we saw more full-time jobs lost than part-time jobs gained. Since the recession we have seen more part-time jobs added than full-time jobs lost, except during 2015.

Unemployment Claims normally Drop during September. The number of unemployed workers normally drops during September, NSA, and is often reported as ticking slightly higher from August to September. The Current Population Survey (CPS) does not count people who are receiving unemployment benefits, it measures the number of people who are out of work who are actively seeking work. The weekly unemployment claims data measures those who are receiving unemployment claims for the first time and on a continuing basis. The continuing claims data for the week ending September 16, then there were 1.642 million unemployed workers. There were 1.736 million for the week ending September 9th. There were 1.885 million unemployed during the week ending  August 12th.  Only between one in three and one in four of the unemployed were covered by unemployment insurance. This means that we should see the NSA U-3 Unemployment number fall by 300,000 to 400,000 and possibly 600,000.

Workforce Participation Matters. Workforce participation and the Workforce Participation rate did not receive much attention until the 2008 election cycle. Workforce participants are those working full-time jobs, part-time jobs or those who are unemployed. There were roughly 127 million full-time employees, 27 million part-time employees, and 7 million unemployed workers for a total of nearly 162 million participants. We could have had 162 million full-time employees and no part-time jobs, no unemployed workers and we would still have had 162 million participants. We could have had no jobs and 162 million unemployed workers and we would have had 162 million participants.

The Unemployment Rate has been falling since January 2010 - the participation rate had been, too. We have seen the participation rate, non-seasonally adjusted, improving since 2015 for the same month comparison. We saw the highest NSA participation rate for the month of September since September of 2014 last September. We have seen participation drop during September. That said the participation rate this August was 63.00%. If we see the number of unemployed drop more than we see gained in jobs then the participation rate could drop. The problem here is that there are seasonal factors for the FT job number, the PT job Number, and the U-3 Unemployment number, vary from month to month and year to year. They also vary between classifications. This means that the combinations and permutations are such that we could lose FT job, Gain PT jobs, and drop the number of unemployed and turn a net loss to a huge net gain in participants. Expect both the unemployment rate and the participation rate to drop, non-seasonally adjusted, and be pleasantly surprised when Seasonally adjusted FT and PT jobs should be a net gain. We have had net gains five of the past six years - there was a net jobs loss during September of 2015 that went unreported in other media sources. We should see net job gains and net unemployment additions so that the seasonally adjusted participation rate should improve.

The net-net is that this month's jobs numbers should be good. We should add workers and jobs. We should see the NSA unemployment level fall. After Friday's data are released there will be considerable analysis done, creating the same monthly reports referenced in the first paragraph. Two or three weeks from now the state and local data will be released. We may see some positive effects from hurricane Harvey as Texas construction jobs increase from month to month and year to year. Further analysis will be done with regard to Florida and Puerto Rico.

It's the economy.