The January Jobs Reports is One of the Reasons We Have Seasonally Adjusted Data
Watch the Revisions.
The January Jobs report is marked by the situation that we will have very different Non-Seasonally Adjusted (NSA) data and Seasonally Adjusted Data story-lines. There are two data sets that go into the jobs report, or employment situation report, and they measure different things. The Current Population Survey (CPS) jobs and unemployment data and the Current Employment Statistics (CES) workers and wages data. Normally January brings seasonally adjusted and non-seasonally adjusted data revisions for the CES data and only revisions to the seasonal factors, and therefore only the seasonally adjusted data. We were advised months ago that the seasonally adjusted CES data was going to be revised down for the CES data with downward revisions for both the Private Sector CES data and the Non-Farm Payroll (NFP) CES data. What can we expect from the CES and CPS data? Down is up.
We should record January to January growth in all sectors. This is important. All sectors have added workers under President Trump. The non-seasonally adjusted growth rate has been slowing since January. That said, even a growth rate of 1.44% could yield a seasonally adjusted gain of 194,000 private sector workers. That would be the slowest January rate of growth since January 2011. If we grow at 1.48% then we could see a number closer to 246,000. The sectors with the largest growth rates should be Mining and Logging (M/L,) Construction,Professional Business Services (PBS,) Leisure and Hospitality (LAH,) and Education and Health Services (EHS.)
We should record December to January declines in all Sectors. Yes. January is one of the months why seasonally adjusted data was created. We always trim the workforce by 1.80% to 2.80% between December and January. It is possible, during a recession, to trim jobs both month to month and January to January. That is not anticipated this January.
There is "no way" that we are going to see a decline January to January this year.We did not have a Government Shutdown. We did not have a GM strike. Last year we had 125.932 million workers, prior to the revisions that will be released this Friday. This December we had 130.344 million non-seasonally adjusted workers. We have trimmed roughly 2.4 million to 2.6 million non-seasonally adjusted private sector workers each of the past four years.We would have to trim 4.4 million workers to go negative January to January. That should not "ever" happen during the course of one month.
Expect to record a drop of 1.95% to 2.05% this January. All sectors are expected to trim workers. The sectors with the largest percentage drops are expected to be Construction, Trade, Transportation and Utilities (TTU,) Information (IT,) PBS, and LAH. This is normal.
The seasonal factors, and the annual adjustment, are the wild cards this month. The range of seasonal factors from 2004 through 2019 mean that a drop of 2.05% month to month could be reported as a gain of 79,000 workers or a gain of 238,000 workers. If we only drop by 1.95% then those numbers could range between 214,000 and 373,000 private sector workers added this month. We know that the CES data base will be reduced by 501,000 workers for the private sector and another 13,000 for Government workers. Will they be shifted backwards to 2014, 2015, and 2016 or 2017, or even 2018? We will find out. Last year the revisions "stole a great report" from President Trump. The data from 2013-2016 was revised higher and the data from 2017 and 2018 were revised lower from their December 2018 values.
Seasonally Adjusted Workers should be reported as being added in all sectors except Information and Mining and Logging (M/L.) We have seen strong growth in all sectors except M/L this year, especially EHS, PBS, LAH, and Construction. We normally see a drop in IT during January. We are already down 22,000 workers, NSA, for M/L November to November. There is a possibility that the SA data for M/L may have the largest month to month spike. Other sectors that should report strong growth are Construction, LAH, EHS, TTU, and Manufacturing.
Seasonally Adjusted worker data should rise for all sectors, January to January. Watch the Government data this month. We had the Schumer Shutdown last January. The largest growth should be M/L, Construction, LAH, PBS, and EHS.
Wages should rise, hourly, and total wages. Hourly wages have been rising at 3% for basically a year. More of the same is expected. When the average wage for workers is multiplied by the number of workers working, and both grow, the impacts are synergistic. We also may see upward movement in hours worked rise.
What can we expect from the Current Population Survey "Jobs and Unemployment Data?" Jobs will record a drop, unemployment will record a rise, and participation should record a rise It is fairly certain that both non-seasonally adjusted (NSA) Full-time (FT) jobs and NSA Part-time (PT) jobs will drop this month. There is the possibility of part-time jobs rising. There should be a seasonally adjusted (SA) rise in Full-time jobs, and a possible rise in SA part-time jobs. Sometimes the FT jobs report a rise and a PT job drop. We often see both the SA FT and SA PT rise during January.
Non-Seasonally Adjusted Unemployment should record an increase while Seasonally Adjusted Unemployment is expected to fall. This is not a surprise. Santa doesn't need his Trade, Transportation and Utility workers during January.
The Non-seasonally Adjusted Participation rate normally hits its annual low during January. The NSA Unemployment Rate tends to hit is annual high during January. The Unemployment rate this past December was just 3.36% NSA. This is almost 3 percentage points lower than January 1996 (6.29%) and January 2004 (6.26%) This should be one of the headlines after the release of the Jobs Report on Friday. The participation rate was 63.03% during December.It was only 63.24% during January 1984, and was rising. It was only 63.35% during January 2012, and was falling. Former President Clinton and Former President George W Bush had almost identical participation rates during their pre-election January recording periods at 65.82% and 65.75%, respectively. We should be better than January 2014 when we had a participation rate of 62.52% and an unemployment rate of 7.03%. We won't exceed the 63.27% participation rate of January 2013. That's fine because back then the unemployment rate was a whopping 8.52%.
Watch the Multiple Job Holder Levels this month. Last month we had 8.058 million multiple job holders (MJH) with 4.419 million FT PT job workers, 2.072 million PT PT job workers, and 336,000 dual FT job workers. The balance fall in the "variable" hours workers and the primary PT secondary FT job people. Last year we had 7.749 million total MJH with 4.452 million FT PT, 1.879M PT PT and 249,000 FT FT workers.
The MJH level is expected to drop 3% to 4% month to month. This would place us between 7.73 million and 7.81 million MJH. This would put us at a January level not seen since January 2000 when it was 7.897 million, or January 1999 when it was 7.702 million, or last year at 7.749 million. The FT PT worker level could grow or contract by 3%. The dual PT number is expected to fall 3% to 13% month to month, or to a range of 1.80 million to 2.0 million. The record for January was set during 2018 when there was 2.04 million dual PT workers. A second job is the ultimate form of unemployment insurance. We could see the dual worker number fall and it will not impact unemployment.
There are other ways to examine the data. How are men and women doing in the Trump Economy. Both genders are expected to have record levels of CPS jobs this January. How are people doing by age group? It is still expected that people over 55 years of age will be over-participating.
Watch the data revisions. A half million workers makes a big difference in the data. Watch the seasonal factors. That could make a difference of 160,000 seasonally adjusted private sector workers. Participation matters.
It's the Economy.
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