Reclaiming Common Sense

The February Jobs Report - A Tale of Two Data Sets

The ADP report was released last week to faint praise. The "jobs" number came in at 183,000. Commentators made off-hand remarks that this was down from the January level of 300,000 workers.  We hadn't seen 300,000 ADP Payroll Positions created during a singe month since 2006.  The article "Feb. 2019 ADP Report: Remarkable" detailed revisions matter and how the upward revisions to the 2018 data and the upward revisions to the January ADP data "stole" 209,000 payroll positions from February.

The February Jobs Report Forecast Article projected strong seasonally adjusted worker gains, too. The article "February 2019 Jobs Report Forecast: Big League" examined month to month and February to February changes in the Current Employment Statistics(CES) worker data and the Current Population Survey (CPS) jobs and unemployment data. The question was whether or not the seasonal factors and revisions to the CES data would reduce the February SA Data that is reported. The other question was could we see a spike in NSA CPS jobs similar to February 2018?

We added more Non-seasonally Adjusted Private Sector Workers than 2014, 2015, and 2016 and reported adding fewer workers. The Headline Non-Farm Payroll data was reported at a seriously small gain of 20,000. Private sector workers were reported at 25,000 workers being added during February. This is much lower than February 2014 when we added 157,000 workers, and lower than February 2015 when we added 227,000 private sector workers and 2016 when we added 206,000 seasonally adjusted private sector workers.  This February we added .418,000 NSA CES workers this month, compared to 310,000 during February 2014, 396,000 during February 2015, and 398,000 during February 2016.  We recorded more workers added and reported  fewer workers added this February.This was lost in almost all discussions. So what happened with the Wage and Worker Data?

We saw month to month non-seasonally adjusted growth in all sectors except Mining and Logging (M/L) and Construction. We even saw month to month growth in Information Technology (IT.)  The largest growth was expected in Government, Construction, EHS, Mining/Logging (M/L,) and information technology (IT.)  The decline in construction and M/L jobs may be the reason why the seasonally adjusted CES data was so week.

We saw annual growth in all sectors except IT, non-seasonally adjusted. The largest growth should have been in Construction, M/L, Financial Activities, Leisure and Hospitality ( LAH,)  and Education and Health Services (EHS.) The largest gains, percentage growth, were observed in M/L, Construction, LAH, PBS, and EHS. This matters because if we see growth in higher paying sectors it pulls up the average wage and if we see growth in lower wage sectors (LAH, EHS, Other Services, and TTU.)

The 2018 CES data and the January 2019 CES data were both revised higher than last reported. The 2018 data was revised up 21,000 workers, mostly in LAH. The January data was revised up by 105,000, net 84,000, mostly in TTU, LAH, EHS and even Manufacturing.

Wages improved February to February by 2.11% to 6.60%, depending upon sector. The largest growth was in IT. The smallest growth was in mining and logging. Overall, wages improved by 3.44%. The workforce grew 1 .93%. Earning power was up 5.11%.

It is important to note that hours workers dropped in LAH, Construction, Manufacturing, and TTU. The  drop in LAH could be an intended consequence of rising minimum wages. Manufacturing and Construction could be weather related.

How is President Trump doing compared to his predecessors? More in the next article.

It's the Economy.