Reclaiming Common Sense

We set an All-time Full-time Jobs Record during May, Even with the Weak Report

This month the Jobs and workers were expected to record a surge, report growth

The peak employment months are normally July and August. Last year we had a similar surge in jobs during the Christmas Shopping Season. Last month's jobs report was a disappointment in the number of seasonally adjusted Current Employment Statistics (CES) workers added to the economy. The number of Current Population Survey (CPS) jobs added were also remarkably low. We still managed to had the most number of workers and jobs, non-seasonally adjusted, that we have ever recorded. This is not what was reported.

What was expected this month was a jump in CPS full-time jobs, a dramatic drop in cps part-time jobs, and a surge in CPS unemployed workers, which should have meant a large increase in non-seasonally adjusted participation. The NSA CES data was a bit of a crap shoot with all sectors expected to add NSA CES workers June to June and most adding workers month to month. The government jobs were expected to fall, which could negatively impact the headline non-farm payroll, depending upon the seasonal adjustments

The Headline Seasonally Adjusted  Non-farm payroll number came in "stronger" than expected. The NFP number, seasonally adjusted, came in at 224,000 workers. The Private Sector number came in at 191,000 workers. What is missing is that the underlying non-seasonally adjusted data cane in over 1 million workers. The level of NSA CES private sector workers was comparable to what we have recorded during the past four years. How did  a recorded 1 million workers get reported as 191,000 SA CES workers. How did June 2016, which recorded better data than the months of June 2005-2015 report weaker data than 2005, 2013, and 2014-2018? We "always" add workers during the month of June. We even added workers during June 2009 and June 2010.  The answer is in the seasonal factors at the individual sector level, most likely.

There is much more to report regarding the Current Employment Statistics data. There is the break down of growth by sector and the changes in wages. This data will be covered in the "Wages and Workers" Article.

We saw over 1.4 million full-time jobs added to the economy. The June non-seasonally adjusted data recorded a pattern that is very similar to almost every year since 1979 will full-time jobs being added and part-time jobs being trimmed. The only June where we added full-time jobs and part-time jobs was the anemic year of 2014. We saw the creation of the most full-time jobs during the month of June since June 2006. We saw part-time jobs trimmed by 806,000. The data does not convey who converted a part-time job to a full-time job. It is understood that some people lost or left part-time jobs and found full-time jobs.

This Full-time job creation and part-time job loss was reported as Part-time Job gains and full-time job losses. Up is down and down is up during the month of June. This is not where the story ends. Two of the weakest years during the past 40 years were 2014 and 2015,  while 2015 was reported as being much stronger in the creation of seasonally adjusted jobs than their non-seasonally adjusted data would indicate. Why were June 2017,  June 2018, and June 2019 reported lower than June 2015? Why is it that the "Jobs Iceberg" is so clear with the non-seasonally adjusted CPS data and why does it appear so random with regard to the seasonally adjusted data?

You may have heard that unemployment rose during June. It did. It did not jump as much as anticipated. It jumped the smallest amount since 1979. The unemployment level may have risen as respondents to the CPS survey said that they were not working and were attempting to find work.The number of U-3 Unemployed workers rose less than during June 1988. It rose less than any year in the graphic that was reported as having seasonally adjusted month of June  U-3 declines.

The participation rate spiked as the unemployment rate declined. This is a challenging thing to do because unemployed workers are participants. When unemployed workers are reduced they are "negative" participants. When part-time jobs are reduced, they are "negative" participants. We added 1.5 million full-time participants, subtracted 800,000 PT participants, and added 222,000 U-3 participants. The thing is that the seasonally adjusted increase in part-time jobs and unemployed workers, minus the change in seasonally adjusted full-time jobs was not more than the growth in the workforce population. The remarkable news that we received non-seasonally adjusted, was seasonally adjusted to lackluster data.

This column is attempting to wake-up the masses with regard to the massaging of, and the messaging of the data. The CPS jobs and unemployment data is different from the CES worker and wages data. The CES worker and wages data is comparable to, not the same as, the JOLTS Job openings and labor turnover survey data. The CPS U-3 data is different from the weekly continuing claims data. The CPS unemployed are out of work and looking for work. The weekly claims data records those who were working who recently lost those jobs that qualify for unemployment benefits.All of this data has non-seasonally adjusted components, reality, and seasonally adjusted data, Governmentland. The seasonal factors used to convert the NSA data to the SA data change by data set, category, month, seasonal and year. Each data set has a different sample size (CPS-Household data, CES-Establishment data, JOLTS data.) You might as well compare A Pomegranate (CPS) to a Red Anjou Pear (CES) to an Apple (JOLTS) to a tomato (Weekly Claims.) All are red fruits, even the tomato.

This report was remarkable. I said as much in my Twitter feed yesterday:

This report was remarkable. There is a lot more left to say.

The worker and wages data will be remarkable. Which sectors grew the most? Were there some contractions month to month or even year to year in the non-seasonally adjusted data? What happened with the seasonally adjusted data?

The Five Presidents data will be remarkable. As already stated, President Trump and President Clinton are the only Presidents to add full-time jobs and reduce unemployment during their first 29 months in office. Former President Obama was in a full-time hole at this point during his Presidency. He was down 640,000 full-time jobs since inauguration while President Trump has added 8.527 million full-time jobs.

The Jobs Data for Men and Women will be remarkable. We have seen that men work more full-time jobs, and more dual full-time jobs than women work. We have seen that Women work more part-time jobs, and more dual part-time jobs, than men work. We know that full-time Jobs rose and part-time jobs fell. We know that this was the record month for combined jobs and for full-time jobs. Will this be a record jobs month for women? Will this be a record jobs month for men?

This report was solid. We might not see the kind of jobs reports we saw during the 1980s and 1990s because employers are only hiring the number of workers that they need.  Participation rates used to really peak and trough during the 1980s and 1990s. We are behind where Former President Reagan was during his 29th month. We are well ahead of where we were on jobs last year. "All recessions" are jobs recessions. We are still expanding. An expansion of workers and wages means an expansion of earned income, which should boost the economy to  strong second quarter and third quarter Annualized GDPs.

It's the Economy.