Reclaiming Common Sense

The Monthly Employment Situation Report, or Jobs Report, can be a market mover. There are so many components of the report that need to be observed.

  • We need to look at the raw, non-seasonally adjusted Current Employment Statistics (CES) private sector worker number.
  • We need to watch the revisions to the prior months data, plural. If April is revised upward that will "borrow" growth from May.
  • The U-3 Unemployment Level should drop significantly, based on the mid-April to Mid-May drop in the continuing claims level. While they measure unemployment differently, workers looking for work vs workers who have lost work and are receiving benefits, they should be headed in the same direction. A new May unemployment level low could be set this month, non-seasonally adjusted.
  • Wages have been rising, non-seasonally adjusted. Workers have been increasing in number. The combined impact of improving wages and improving worker numbers means that total wages are improving faster than inflation.
  • We have seen record levels of combined full-time and part-time jobs, non-seasonally adjusted, the past two months, The "Jobs Iceberg" has turned into a "Jobs Mountain."
  • Will we see an increase in the number working Multiple Jobs?
  • What is the true unemployment rate, after workforce participation is taken into account? Are we at "full-employment?" (Answer: Not really)

The May Jobs Report Forecast projected that we should see a spike in full-time jobs, a slight drop in part-time jobs with a possibility of a slight increase in part-time jobs, and private sector worker growth equal to or exceeding the April 2018 annual growth rate and the May 2017 annual growth rate.


May Unemployment Level is Lower Than May 2001. This month we saw the non-seasonally adjusted U-3 unemployment level fell from 5.932 million to 5.756 million. This was on the low side of what was expected based upon the weekly continuing claims data. This level is lower than it was during May 2001 and almost at the level recorded during May 2000.


The Unemployment Rate is the Lowest May Unemployment Rate under any President Since and Including President Reagan.... The Unemployment rate was 3.68% during April. May that value dropped to 3.56%, non-seasonally adjusted. This is lower than it was during May 1999 when it was 3.96% and lower than May 2000 when it was 3.84%.


... Even so we are not at Full-Employment. The Participation  rate this month edged up from 62.69% to 62.83%. The "problem" is that during May 1999 the participation rate was 66.97%. It was also 66.97% during May of 2000. The difference in participation rate is over 4%. The difference in the participation rate has more significance than the difference in the unemployment rate. If this is full employment then we were at "fullest employment" during May 1999 and May 2000.


Full-time Jobs Jumped by 1.674 million jobs during May. This was the largest April to May jump ever since 1979. This jump was greater than May 1996, May 2015, and May 2010.


Part-time Jobs cratered by 1.012 million jobs. The only time we saw a drop over 1 million was during May 2015 when we saw a drop of 1.224 million part-time jobs.


The Current Population Survey data is "only" used for the participation rate and the unemployment rate.  They use the seasonally adjusted FT job data, the SA PT job data, and the SA U-3 unemployment level. All of those adjustments make the SA Participation rate a "suspect" value. Reality is the non-seasonally adjusted data. The NSA Participation rate is rising even in the face of declining unemployment and a dropping unemployment rate. Unemployed workers are participants. Full-time workers, part-time workers and unemployed workers are all participants. Who do you think is participating more?


Private Sector Workers Joined the Workforce more than any May since 1998. There were 991,000 non-seasonally adjusted (NSA) Current Employment Statistic (CES) Private sector workers who joined the workforce this month. We have had over 900,000 workers join the workforce during May 2013, May 2014, and May 2015. The last time that the May number was recorded this high was May 1998.


The Seasonal Factor used to convert to the seasonally adjusted data ticked down from last year's value. A lower seasonal factor mean a lower seasonally adjusted value. If we used last year's seasonal factor then the SA CES value should have been reported at 233,000. The seasonal factor had been rising since it hit bottom during 2012.  Sometimes the SF curve is a scatter plot and some times it is a straight line up or down, at a slight angle.


The Seasonally Adjusted CES data was significantly better than May 2017 and seriously solid compared to May 2016.  Remember from the forecast article that the May SA CES Private sector number went negative  with the release of the June 2016 Employment Situation Report. Even after all of the revisions made to the 2016 and 2017 data the "best" that they could get for May 2016 was 20,000 SA CES private sector workers added during May 2016. This year we added 218,000 SA CES workers.


There is a ton of data yet to be examined in future articles. WE saw a drop in the number of people working multiple jobs. The Multiple Job Worker article will go into the details. President Trump has added almost 6 million jobs since taking office. The Five Presidents at 16 months article will cover the Job Creation data and the effective unemployment rate. How are men doing in this expansion - they had been suffering. How are wages doing - The non-seasonally adjusted wage data was not available at the time of the writing of this article, that will be addressed as soon as the "FRED" data becomes available. What is clear is that this was a seriously strong jobs report.


It's the economy.