Reclaiming Common Sense

The Jobs data and Worker Data have been out of sync this year

October Data Points to Spike in Workers and in Jobs

The monthly Employment Situation Report, or Jobs Report, is created using two different data sets. The Current Population Survey (CPS) Jobs and Unemployment data is one data set. the Current Employment Statistics (CES) Worker and wages data is the other data set. These data sets have been out of whack this year where some months the CPS data spikes and the CES data barely moves or vice versa. This month both data sets appear to be in sync for a push upward. This jobs report could throw off those who use the three month rolling average as their guide.

Non-Seasonally Adjusted Private Sector Workers number  should grow by 550,000 to 650,000 workers. We have added more than 400,000 NSA CES workers seven  of the past eight years. We have added 550,000 workers four of the past five years. We have added more than 650,000 workers during two of the past four years. The NSA CES month to month data indicates that there could be weakness in the Leisure and Hospitality (LAH) sector and the Manufacturing Sector. The largest growth, in percentage terms, are expected in Education and Health Services (EHS,) Professional Business Services (PBS,) Information (IT,) Trade, Transportation and Utilities (TTU,) and even mining and Logging (M/L.) Government sector workers may grow by the highest percentage. They are not included in the private sector calculations. The month to month data, as a whole, is pointing towards 0.40% to 0.49%.

The non-seasonally adjusted October to October data indicates that all sectors should grow. The largest growth is expected in M/L, Construction, PBS, EHS, and LAH.  This is important because our largest sectors are the TTU, EHS, Government, PBS, and LAH. If the largest sectors have the largest percentage growth then we could see a big number. We are at a record level of September Private Sector Workers. The growth rates can slow while the real number of workers exceeds prior year levels. The October to October growth rate is expected to drop from the 1.55% of August and the 1.52% of September to possibly 1.46% or 1.49%.

We should add over 200,000 Seasonally adjusted Private Sector workers. The seasonally adjusted month to month shows that the number of Government workers and the number of Manufacturing workers could grow or contract. All other sectors are expected to grow month to month, seasonally adjusted. The largest growth sectors are expected to be M/L, LAH, IT, Construction, and PBS. We could see a drop in manufacturing workers due to the GM strike. It depends how striking workers are counted in the data. They may be in limbo as their are neither employed (being paid) nor unemployed (receiving benefits.)

All sectors are expected to grow, seasonally adjusted  October to October. The largest growth sectors are expected to be M/L, Construction, PBS, Manufacturing, EHS, and LAH. If we discount the normal trend of a spike in manufacturing then the largest sectors are expected to grow by the largest amounts.

The Seasonal Factor has been drifting higher for years, skewing the data higher than expected. If we grow on a month to month basis of 0.40% to 0.47% then we could add 164,000 to 254,000 private sector workers. If we grow at 1.46% annually then we could add 204,000 seasonally adjusted worker. A rate of just 1.49% would yield 243,000 workers. A rate of 1.52% could mean 281,000 seasonally adjusted private sector workers added this month. It is possible, unlikely, that the month to month growth rate would come in at 0.38%, and draw down the annual rate below 1.46%. It is more likely that we would grow at 0.47%, as we did during 2017, and that the seasonal factor would drift back down to the October 2017 level, meaning that we would have 183,000 SA CES workers added and that the government worker data would push that number closer to 200,000.

We should see a spike in Full-time (FT) jobs and an uptick in Part-time jobs (PT). It is possible to see a drop in NSA FT workers and an increase in NSA PT jobs. The data from October 2017 was unusual because we saw a drop in FT and PT jobs and a near record increase in NSA CES workers. We could easily see an increase of 500,000 NSA FT jobs and an increase of 200,000 to 300,000 PT jobs. We saw the economy add nearly 1 million total jobs during October of 2014.  The combinations mean that we could see 500,000 to 750,000 jobs created this month. This is not the headline "Establishment" data. This is the "Household" data.

The Seasonally Adjusted CPS jobs data indicates that we should see a modest spike in seasonally adjusted jobs. We saw a larger than expected spike during 2015 (pre-election year) than the NSA CPS data would have indicated. Conversely, the 2018 NSA CPS data was recorded as strong during 2018 and reported as contracting.

The Unemployment Level and Unemployment Rate are both expected to drop. Normally we hit the seasonal low for the weekly claims data during October. We also hit the annual low for CPS unemployment during October. There are some months where the weekly claims data dips and the CPS U-3 data rises as people who are looking for work, who are not in the workforce, say that they are unemployed even though they are not collecting unemployment benefits. These could be people who worked jobs that did not have unemployment benefits or they could be people who have used all of their benefits.

Last Month the September U-3 level was  5.465 Million and the Unemployment Rate was 3.3%. The all-time low for October since the start of the unemployment insurance program (1967) was October 1968 when we had a 3.2% unemployment rate. The last time the October unemployment level was this low was during October 1999 when we had 5.372 million workers unemployed, and then it is 5.153 million during October 2000. The unemployment level is expected to drop 200,000 to 400,000 workers. The 1999 level is well within reach. The 2000 level may be a stretch. The unemployment level is contingent upon the number of FT jobs, the number of PT jobs, and the U-3 unemployment level. The U-3 unemployment rate could fall dramatically.

The Participation rate should climb from last year's level. last year the participation rate rose from 62.70% during September to 62.95%. Last year the unemployment rate fell from 3.56% to 3.55%. This September the Participation rate was 63.14%. President Trump inherited a lower participation rate from former President Obama than former President Reagan inherited from former President Carter. It is difficult to increase the participation rate while decreasing the unemployment rate because fewer unemployed workers means fewer participants unless an equal number of FT or PT jobs are added to replace those participants.

The number of participants joining the workforce should be greater than population growth. There were 131.7 million full-time jobs, 26.8 million PT jobs and 5.5 million unemployed workers for 163.9 million participants. We should add 750,000 jobs and reduce the unemployment level by 300,000 for a net gain of 450,000 participants. Last month the population grew by 206,000 workers. More new participants than new potential workers means the participation rate should rise this month.

We could set October Records for Multiple Job Workers We could set All-time Records for Multiple Job Workers, plural. Last month we had 8.331 million multiple job workers. There were 4.787 million people working a FT job and a PT job (FT PT.) There were 2.114 million PT PT workers, and 279,000 FT FT. There were another 1.151 million working "PT FT" or variable hours. Multiple job workers tend to peak during October, November, or December. It is anticipated that we will record a jump of 2% to 5% in total MJH to 8.5 Million to 8.75 Million. The number of FT PT workers should increase by 2% to 7% to between 4.8 million and 5.1M. Dual PT workers should increase 1% to 10% to between 2.1M and 2.3 million PT PT workers. (November 1996 we had 8.494 million MJH, of which 4.648 million were FT PT.)

We should set a record for women workers in the economy. We should set an October record for men working in the workforce. Last year women set all-time records for total CPS jobs during September, October, November, and December. We set an all-time record for women working FT and PT jobs combined during September. Women have added FT and PT jobs during October during the past three years. Their unemployment rate should fall. Men have added FT and PT jobs during October of 2016 and October of 2018. W e should set an October record for men. Men tend to work more dual FT jobs than women. Women work more dual PT jobs than men. We will see what happens this month.

The ADP data was pointing to possible weakness in Mining and Logging (Natural Resources.) The ADP data is private sector payroll data, seasonally adjusted. The ADP data is similar to, not identical with, the CES worker data. There is no delineation between full-time and part-time jobs. The CES data is comparable to, and different from, the JOLTS Job Opening Data. None are comparable to the CPS unemployment and jobs data. Comparisons between job openings an unemployment are misguided. The ADP data only gives us a potential insight in to the CES private sector data. The ADP data and the Private Sector CES worker data rarely align.

There are a number of ways to examine the data. This month the CES and CPS data are both pointing towards a substantial uptick in non-seasonally adjusted workers and jobs, respectively. Unemployment should drop to seriously low levels. Participation should rise. Wages have been rising all year. Wages should set October records across the board in all ten private sector major sectors.  Get ready for some records to be set.

It's the Economy.