Will the Projected Jobs and Worker gains be recorded? Will they be reported? What will happen with the revisions to the data?
The monthly employment situation report, or jobs report, is created using two different databases: the Current Population Survey (CPS) data and the Current Employment Statistics (CES) data. The CPS data measures the workforce population, the number of full-time and part-time jobs, and the number of unemployed workers. The CES data measures workers in the workforce. The headline non-farm payroll data includes government workers. The total private sector number, the one used to monitor former President Obama's "jobs streak" was the seasonally adjusted CES total private sector worker data that excluded government workers. Each data point in the CES and CPS data sets have non-seasonally adjusted and seasonally adjusted components. The seasonal factors used to convert the non-seasonally adjusted (NSA) data to the seasonally adjusted (SA) data change by data set, class, month, season, and year. The data used to convert NSA unemployment (U-3) to the SA U-3 can make a recorded drop in NSA U-3 be reported as a spike in SA U-3. We have been in a period of time where unemployed workers and part-time workers are finding full-time jobs
The Private Sector Worker number should grow month to month and year to year. This month we should see growth over 0.40% month to month. The current trend is for growth to exceed that of 2016 and 2017 and to be comparable to 2011 and 2013. It is important, at this time, to remember that when the January Jobs Report was released that there were significant revisions to the 2016 and 2017 data whereby 450,000 SA CES private sector workers were shifted from 2018 to 2016 and 2017. This boost the prior years of growth, changing the rolling year growth curve and impacting the month to month and same month growth for those two years. If we see month to month growth of 0.43% then we would see a potential growth of 196,000 (SA) private sector workers. Last year we grew at 0.49% and this year the rolling year growth rate is higher than it was last year. If we see growth of 0.51% then the SA CES could grow at 298,000 workers. The month to month data indicates that we should see between 200,000 and 300,000 workers added this month. That is a large range.
The Rolling Year growth indicates substantial growth. rate last month was 1.97%. Last year the October value was just 1.72%. There is month to month variability in the annual rate. The revisions to the NSA CES private sector worker data that moved over 400,000 workers from 2018 to between 2016 and 2017 boosted the curve highest for 2016 and a bit higher, still in a decline from 2016, and lowered the curve for the 2018 starting point. If we only grow at 1.90% then we will add 186,000 workers. If we grow at 1.93% that number is boosted to 224,000. It is very likely that we will hit 1.97% for back to back months, in which case we will see 275,000 SA CES private sector workers added, before revisions to the two or more prior months of data. Remember that if the data from September is revised higher by 40,000 workers that this will "borrow" 40,000 from October bringing the 275,000 number down to 235,000.
This year through September we have added 1.8 million SA CES workers. This places us ahead of where we were during 2015, 2016, and 2017.We are not far off the track of 2014, and we would be well ahead of that mark except for the revisions to the data this past January. This sets the "floor" for expectations at 200,000 per month.Last year we had 125.516 million SA CES workers during October. If we grow at 1.97% that would place us at 128 million workers - an increase of 637,000 seasonally adjusted workers. That number, while possible, based on the growth rate that we saw during 2015, would have a hard time being explained in the media.
The combinations and permutations of seasonal factors and growth rates gives an insight as to what could be expected. The higher the seasonal factor the higher the seasonally adjusted data. If we grow as we did during 2015, month to month, then we should see a 300,000 jobs report number. The thing is that this would require a seasonal factor in line with what we saw during 2012, 2013, 2016, or 2017 to be used. If the seasonal factor from 2015 was used that would generate a SA CES value of 282,000, without revisions. If we grow at the rate we did during 2013, then we would expect a much lower number. If we grow at the same rate as we did last year and use the same seasonal factor then we would add 268,000 SA CES private sector workers. We know that we are growing faster than we were last year.Expect a Strong Private sector number of 250,000 to 300,000 before revisions. Expect upward revisions to August and September to steal some thunder from October. There is also the potential that there may be massive revisions to the data from January through September in order to maintain a "nominal" growth for October.
What can we expect from the different sectors? The combinations and permutations of each sector could take an article all by itself. There are eleven sectors with eleven seasonal factors. The data here can be analyzed on the same principles of the overall data: Rolling year, current Year, month to month change, and October to October change. The non-seasonally adjusted data indicates that we should see all sectors except Leisure and Hospitality (LAH,) and Manufacturing. The is the possibility for flatness in Mining/logging (M/L) and Manufacturing. The largest non-seasonally adjusted CES worker growth should be in Professional/Business Services (PBS) for the private sector, and there should be a spike in Government jobs, at the start of their fiscal year. The October to October data indicates that we should see NSA CES worker growth in all sector from October to October except possibly Information Technology (IT.)
Seasonally adjusted growth should be reported in all sectors except Government. It is very possible that we will see a spike in SA CES workers from September to October in M/L, Construction, and Manufacturing. Contrary to the NSA data, the SA LAH numbers should rise month to month. Expect Seasonally adjusted spike in October to October growth in five sectors, The largest spikes should be in Trade, Transportation, Utilities (TTU,) PBS, Financial Services, and even IT. Smaller gains, still significant, should be recorded October to October in Education/Health Services (EHS,) and LAH. There may even be a spike in SA CES Government workers.
The outlook for the October Private Sector data is good on all levels. Expect a minimum of 200,000 private sector workers added to the total from last month. Expect anywhere from 40,000 to 300,000 workers to be added to the data from this year, spread out over the nine prior months, especially if the annual growth breaks above 1.97%, the rate we had this September. Expect almost all sectors to grow month to month, NSA, and expect all private sector groups to grow their numbers month to month. The question is if manufacturing "drop" from last October - not likely. The other question is how big will the October to October SA CES government worker number be reported? Month to month and year to year growth is indicating that we should see a value between 250,000 and 300,000 reported. Net: Net: 275,000 SA CES Private sector workers will be added before the upward revisions to multiple months brings that number down to 205,000.
Workers are one thing, Jobs are Another thing. This section could also be called "Participation Matters." The participation rate is the fraction of the population that either has a full-time job, a part-time job, or is officially unemployed. Unemployed workers may not have had work recently, they might not even be receiving unemployment benefits recently. These unemployed workers are workers who are out of work who want to work. We had an unemployment rate, NSA, last month of 3.56%. This was a lower NSA U-3 unemployment rate than we had had since January of 1980. The problem is that while the NSA U-3 rate was lower than the 3.61% U-3 unemployment rate of October 2000, so was the participation rate. The NSA participation rate of September 2018 was 62.70% The participation rate during October 2000 was 66.86%. If last month was "full-employment" with 62.70% participation then we must have had "full-er employment" during October of 2000 and "full-est employment" during the Summer of 1997when the participation rate was 68.09% and the U-3 rate was 5.05%.
Unemployment Economic Urban Legends. This column has written numerous articles on the economic urban legends that have been created during the past decade. The article "Economic Urban Legends" details six economic urban legends from the former Obama Administration, including the Private Sector "job" streak and the weekly unemployment claims streak. There have been four new economic urban legends foisted upon us since 2017: The "more job openings than unemployed workers" legend and the "record low teen unemployment rate" urban legend, and the "record low African American and Hispanic workers unemployment rates" legends. To be clear, we have record or near record low levels, in real numbers, of unemployed workers, unemployed teens, unemployed African American workers, and unemployed Hispanic workers. The seriously low participation rates of African Americans, Caucasians, Hispanics, Teens, women, and men workers are skewing the official unemployment levels lower than they should be reported. Participation matters. We have had record monthly levels of combined Full-time and part=time CPS jobs since February 2017. What can we expected from the full-time (FT,) Part-time (PT,) and unemployed workers (U-3) data this month?
Could we see 600,000 to 1 million non-seasonally adjusted jobs added to the economy this month? You did not misread that line. Normally we add 500,000 to 1 million NSA FT jobs added to the economy during the run-up to the Christmas season. The real question is whether or not we will see NSA PT jobs added to the economy?
Could we see massive non-seasonally adjusted job gains be seasonally adjusted to seasonally adjusted job losses? We saw net NSA CPS job losses during 2013, during the "jobs streak," and during October of last year, even though we had worker growth last October. The CPS data measures job sand unemployed workers. The CES data measures workers. Apples and Pears. Both are fruits. Both grow on trees. Job Openings are Pomegranates to the unemployed workers Apples. One could argue that separations are cherries to the unemployment level. The Job Openings data is comparable to the CES data, and lags the CES data by one month. We will receive the Job Openings data (JOLTS) report for September the week after we receive the October Jobs Report. We normally see spikes in jobs and workers during October, just as we normally see jobs and workers plummet during January. This is the reason for the seasonally adjusted data.
The Continuing Claims Level hit a 45 year low during the second week of October. Will this be reflected in the unemployment level? The NSA U-3 level has dropped every October since, and including, October 2011. We have seen the SA U-3 level increase four of those nine years. Last week we received the continuing claims data for the week closest to the collection date for the CPS data. The continuing claims level dropped from 1.461 million to 1.369 million between mid-September and mid-October. This is another fruit. Maybe a Blood Orange. We had 5.766 million NSA U-3 during September. What is happening with the 4.3 million unemployed workers who are not receiving benefits? Will we see a drop of 92,000 unemployed workers or a drop of 200,000 to 300,000 unemployed workers, as we have three of the five of the past eights years. Will it drop by 314,000 as it did last year or 418,000 as it did during 2012?
Dual Job Workers may increase from last month and decline from Last October. Multiple job workers tend to peak during the final quarter of the year. Some years the total number of multiple job workers, or multiple job holders (MJH,) peak during October, some years it is November, some years it is December. The overall trend is higher from the same month of a preceding year to the following year. We already have 4.2 million workers working a FT job and a PT job. It is expected to rise. We already have 2.05 million workers working two part-time jobs. That number could decline. Last year we had 1.770 million PT PT workers. The number of people working two FT jobs could fall from last month's 331,000 and remain above last October's 295,000 FT FT worker level. The statistical oddity is the number of people working a "primary" part-time job and a "secondary" full-time job. These may be seasonal FT jobs that only last through the end of the year. Will the total number of multiple job holders breach the eight million mark as it did during October of 1996, 1997, 1998, 2004, and 2016? That would require a spike of 300,000 MJH workers. Will we eclipse the eight million mark during November? December? All of the Above?
Wages are rising. This column has been tracking wage changes for part of this year. There is talk that the "nominal wage" growth, adjusted for inflation, is not keep up with the rate of inflation this year. That is economic hogwash. Just as there are seasonally adjusted CPS jobs and unemployed workers, just as there are seasonally adjusted CES workers, there are NSA and SA weekly wages by sector. Some commentators use the CPS median wage data - this is misguided. Mean, average, wages can be used to compute total wages Median wages cannot be used for the same purpose.
This has not been reported because, apparently, people are reporting the seasonally adjusted weekly wage growth, and they may be multiplying seasonally adjusted workers by seasonally adjusted wages. The seasonal factors could amplify each other, cancel each other out, or diminish real wages. We should see NSA Weekly Wages grow by over 3%. Will Manufacturing break the 2.5% level? Will Financials lead the way? Will EHS and TTU drag down the average?
Many more ways to examine the data. We are climbing a Jobs Mountain after years of dealing with a Jobs Iceberg. We lost nearly 15 million full-time jobs between July 2007 and January 2010. It took until July of 2015 too regain those lost CPS FT jobs. Then we lost those FT jobs through January 2016. WE regained those jobs lost and added to them through July 2016. Then we lost those gains and ended January 2017, and the Obama Presidency, with fewer FT jobs during January 2017 than we had during July 2007. This column will examine the data of the "Five Presidents at 21 months," for former Presidents Reagan, Clinton, George W Bush, and Obama with current President Trump. Only Presidents Clinton and Trump have reduced unemployment and boosted full-time jobs, simultaneously, during their first 20 months. This column will also look at the "War on (Wo)Men" data, where women have added more jobs than men since 2007. It will also examine the "Red, Gray, and Blue" data for jobs and unemployment by age group.
Expect the non-seasonally adjusted CPS data to show a spike in FT jobs and a possible boost to PT jobs. Expect the U-3 number to record a fall and report an increase in numbers. The non-seasonally adjusted Participation rate should rise a little bit as the drop in unemployed workers add a negative number to the participation level.Workers "will" rise. There will be adjustments to the CES worker data. There will be differences between the Private Sector data and the Non-farm payroll data due to a spike in Government workers. Wait for the report - watch the data. Remember to compare apples to apples and not apples to pomegranates, red Anjou Pears, or Bing cherries
It's the economy.
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