Last month the Seasonal Factors Skewed the Data Low
It happened again this Month
The monthly Jobs Report can be a market mover. This month we need it to be a market stabilizer. The Market Gyrations have been created by a fear of the unknown. What is the Coronavirus, or Wuhan Virus? The good news here is that the Jobs data was collected by the 12th of the month, before the major outbreak of the virus. The Jobs Report is created using two data sets: The Current Population Survey (CPS) jobs and unemployment data and the Current Employment Statistics (CES) Workers and Wages data. The headline data is the Seasonally Adjusted (SA) CES Non-farm Payroll (NFP) worker data. The SA NFP data is different from the SA ADP Private Sector Payroll data that was released on Wednesday. The NFP data includes Government Workers. What happened this month?
The Month to month data for the CES Private Sector was pointing to strong non-seasonally adjusted growth. The data indicates that we could expect 0.31% to 0.39% growth this month. All Sectors were expected to record non-seasonally Adjusted February to February Growth except Trade, Transportation, and Utilities.It was thought that we could see 1.62% to 1.74% growth February to February. It was said that we needed to watch the seasonal factors The overall seasonal factor has been dropping for decades. The Current Population Survey data was pointing towards large gains in full-time jobs, part-time jobs, and participation, even as unemployment fell. This and more was covered in "Feb. Jobs Report: Covid-19 Proof."
We recorded a month to month growth rate of 0.35% or 228,000 Private Sector Workers added. The talking heads were anticipating 175,000 positions to be added this month. This growth rate is better than February 2019, and it is better than February 2015 and February 2016. This will be important later. The annual February to February Growth rate was 1.65%. All of this was better than expected or within expectations.
The seasonal factor edged up a little bit from last year. Last year we had 20,000 positions added. Last year the seasonal factor was a record low. It meant that while 418,000 NSA CES Private Sector workers were added the headline Private Sector Number was just 25,000. This column raised a question as to how we added 1.2 million CPS jobs and only 25,000 workers. If we used last year's seasonal factors then this year we would have only added 187,000 private sector workers. If we used the February 2016 ,seasonal factor then we would have reported 354,000 seasonally adjusted private sector workers added.
Last month's data was revised down and up, simultaneously. The non-seasonally adjusted data was revised down from 127.557 million to 127.524 million, or 33,000 workers. The seasonally adjusted data was revised up from 129.503 million to 129.541 million or up 38,000 workers. This means that the headline number could have been reported at 266,000 workers, seasonally adjusted. Did we grow by 228,000 or 266,000 workers? Did we grow by 354,000 or 392,000 workers?
Better or worse February than February 2016? How did we grow by more non-seasonally adjusted workers during February 2020 than February 2015 or 2016 and report fewer workers added? Let's look at the data.
Wait. The original data was that we added 418,000 NSA CES and added 25,000 SA CES private Sector workers. Last month the Annual revisions were released. Did someone think that nobody would catch these revisions? Did someone think that we wouldn't notice that 8,000 fewer NSA CES workers were added during 2019 than 2016 and that it was reported 243,000 SA CES workers lower after the revisions? This is Government Match. Last year it was the Tale of Two Data sets. This year it may be the Tale of Seasonal Factors.
The Current Population Survey Data is in good agreement with the Current Employment Statistics this month. We added 668,000 NSA CPS full-time jobs and 355,000 NSA Part-time CPS jobs. The SA CPS data was weak by comparison. We only added 10,000 SA FT jobs and 197,000 SA PT jobs.
Unemployment recorded and reported drops this month. The NSA U-3 Unemployment level fell by 286,000 workers. The SA U-3 fell by 105,000 workers. This was anticipated. It isn't really being reported. This is the lowest February unemployment rate since level since February 1974. This is the lowest February NSA Unemployment Rate since February 1967.
The participation rate is the highest for the month of February since February 2012. The Participation rate during February 2012 was 63.57%. That level dropped to 63.20% during February 2013, and hit its recent low of 62.51% during February 2015. We now have a participation rate of 63.26%. Would you rather have an unemployment rate of 8.71% and a participation rate of 63.57%, as we had during February 2016, or an unemployment rate of 3.79% and a participation rate of 63.26% as we have this month. We are still not at full-employment. The Effective Unemployment rate is 9.17% compared to February of 2002 when we had an unemployment rate of 4.43% and a participation rate of 67.01%. That is (was) full-employment.
The Participation rate is rising year over year as the unemployment rate continues to fall. President Trump inherited the lowest participation rate in over a generation. The participation rate was projected to keep drifting lower as Baby Boomers started to retire. That has not happened. This column will go into more detail in the "Five Presidents at 37 months" article next week.
What sectors are doing well? This column will address the month to month and February to February changes in workers in the "Wages and Workers" article. It will also look at he changes in hours worked and wages earned February to February.
Multiple job workers increased February to February. This column has stated multiple times that the best form of unemployment insurance is a second job. If you lose one job you are lesser employed, not unemployed. Last year we had 7.823 million multiple job workers. This month we have 8.181 million. The changes in multiple job workers and the changes in jobs for Men and Women will be addressed in the "Men, Women, and Multiple Job Workers" article.
What is happening by age group? We have seen problems getting younger workers to find jobs. We have seen the workforce graying with a stead increase in workers over the age of 60 years old. Older workers are over-participating compared to prior to the recession.Younger workers are under-participating. This will be covered in the "Red, Gray and Blue" series.
This jobs report was remarkable. There was a lot to say. There is still much more that needs to be said. This report bodes well for the rest of the year. We have had strong back to back jobs reports. We may see an influx in manufacturing workers as inventories are drawn down. We may see a surge in construction as interest rates tumble. This data was better than was reported.
It's the Economy.
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