Reclaiming Common Sense

The Jobs Data has been a Battle of Two Data Sets

This Month The Current Employment Statistics Data is the Winner.

The first week of the month is usually Jobs Week. The first Friday of the Month is usually the Jobs Report. The prior Wednesday is the ADP Private Sector Payroll Report. The Thursday between those two days is the Weekly Unemployment Claims data. The Current Population Survey (CPS) data for jobs and unemployed workers is looking lackluster. The Current Employment Statistics (CES) data on workers and wages look rather good.

We almost stalled during August 2015 - August 2019 could be best since 2014. The CES data is indicating that we could see a "pop" in the CES private Sector number. The underlying data is pointing toward a surge in hiring in Construction, Mining and Logging (M/L,) Education and Health Services (EHS,) and Professional and Business Services (PBS,) as well as Government, The government hiring will make a sizable difference between the non-farm payroll data and the private sector data. The non-seasonally adjusted data is pointing towards declines in Financial Activities (FIRE,) Leisure and Hospitality (LAH,) Other Services (OS,) and possible Trade Transportation, and Utilities (TTU.)

The seasonal factors used to convert the non-seasonally adjusted data to the seasonally adjusted data have been rising for many years. There was a huge spike in the seasonal factor used during August 0f 2015. If we grew at the same rate (0.00%) that we did during 2015 then we would only add 85,000 private sector workers this month, using the 2015 seasonal factor. The thought is that they will not use the 2015 or 2016 seasonal factor this month. It is thought that we could grow between 0.12% and 0.18% and add 154,000 to 232,000 SA Private Sector workers. A number around 193,000 is very possible, before revisions to the June and July data.

The Annual data has been slowing. We saw an annual growth rate of 1.96% last August. That value dropped to 1.69% this past April. If we grow faster than 0.14% month to month then we could see this annual rate of growth rise to 1.69%.  If we grow by 185,000 SA CES private Sector workers. The NSA August to August growth us expected in all sector. The NSA data indicates that there will be growth in all sectors, especially Mining and Logging, Construction, PBS, EHS, and Manufacturing.

The Seasonally adjusted August to August data points in a similar direction. The main sectors for growth are M/L, Construction, PBS, Manufacturing, and EHS. While it is possible that the annual growth could come in at 1.64% and generate a value of 121,000 private sector workers, the other limit is looking towards 211,000 or more workers added this past month.

We have been setting current month average hourly wage record this year. If wages increase and workers increase then gross total wages should rise. We saw a slight hit in hours worked last month, even though we saw strong levels of multiple job workers. It will be important to see if they reinforce each other this month. 

Why are other projecting a number closer to 155,000? The trend has been for lower growth month to month. The other people are examining three month averages and trends. This data analyzed her, in this article, are month to month and same month data. If we grow at the same rate as we have been, if we continue trending with the 2016 data, then we could add 96,000 non-seasonally adjusted workers. If we grew at that rate and used the 2016 seasonal factor then we could see growth of 143,000 workers.

The CPS Jobs data paints a different picture. We should lose part-time jobs and "will" lose full-time jobs as people head back to school. The NSA CPS data is very different from the NSA CES data.

The SA CPS data indicates that we will report FT job Gains and Part-time Job Losses. Up is down, down is up. This is the reason why we have seasonally adjusted data.

The Unemployment level should fall. We should drop from last August's level of 6.370 million. Will we drop close to the recent low of 5.963 million recorded during August of 2000?

The unemployment rate should be lower than last August while the Participation rate should be higher than last August. The July Unemployment rate was just 3.97% NSA during July and 3.93% last August. Participation peaks during July and the unemployment rate troughs during October. The participation rate was 63.63% during July and 62.74% last August. Unemployed workers are still participants. The drop in the overall unemployment rate and increase in participation rate from August to August is significantly different from the drop in both the unemployment rate and the participation rate during the Obama Administration. It is also important to note that the participation rate during the Clinton Administration was significantly higher than the Obama Administration or the Trump Administration. Comparing unemployment rates without comparing participation rate is a fools errand.

There are many more ways to examine the data. There is normally a drop in the Multiple Job Holders after the Summer before peaking for the year during October, November, or December as people work more jobs during the Christmas Shopping season. Men may see a spike in jobs if the spike in manufacturing workers, construction workers, Financial Service workers, and professional business service workers come true. We should also see a record level of women with full-time jobs and part-time jobs. The record level of women working may be registered as a spike in Education and Health Services and Leisure and Hospitality. July tends to be peak participation for teens. Will we see a significant drop off in jobs for teens and twenty-somethings? Will we continue to see elevated participation for those over the age of 55 years of age?  How will President Trump do compared to his predecessors?

The non-farm payroll data includes government workers. The Private Sector data is closer to the ADP Private Sector Payroll Data. The three surveys (CPS, CES, and ADP) have different sample sizes and are measuring different groups of people. None of this data should be compared with the JOLTS Job Openings data. The JOLTS data is comparable to the CES worker data except that it is yet another different sample size and one month delayed. This week we receive the August Employment Situation data and next week we receive the July JOLTS data.

Watch the revisions. If the July data is revised up by 30,000 workers then this will borrow 30,000 from August. A 185,000 August could be reported as 155,000. Likewise, if the July data is revised lower by 30,000 then the August data could be reported at 215,000.

Expect solid annual growth. Except some weakness in the month to month data. Watch the government worker data. This could bolster the non-farm payroll data.

It's the Economy.