The Message From The Jobs Report – The Economy Is Slowing
Last week, the Bureau of Labor Statistics (BLS) published the March monthly “employment report” which showed an increase in employment of 196,000 jobs. As Mike Shedlock noted on Friday:
“The change in total non-farm payroll employment for January was revised up from +311,000 to +312,000, and the change for February was revised up from +20,000 to +33,000. With these revisions, employment gains in January and February combined were 14,000 more than previously reported. After revisions, job gains have averaged 180,000 per month over the last 3 months.
BLS Jobs Statistics at a Glance
- Nonfarm Payroll: +196,000 – Establishment Survey
- Employment: -201,000 – Household Survey
- Unemployment: -24,000 – Household Survey
- Involuntary Part-Time Work: +189,000 – Household Survey
- Voluntary Part-Time Work: +144,000 – Household Survey
- Baseline Unemployment Rate: Unchanged at 3.8% – Household Survey
- U-6 unemployment: Unchanged at 7.3% – Household Survey
- Civilian Non-institutional Population: +145,000
- Civilian Labor Force: -224,000 – Household Survey
- Not in Labor Force: +369,000 – Household Survey
- Participation Rate: -0.2 to 63.0– Household Survey”
There is little argument the streak of employment growth is quite phenomenal and comes amid hopes the economy will continue to avoid a recessionary contraction. When looking at the average rate of employment growth over the last 3-months, as Mike noted at 180,000, there is a clear slowing in the trend of employment. It is this “trend” we will examine more closely today.
While a tremendous amount of attention is focused on the monthly employment numbers, the series is one of the most highly manipulated, guesstimated, and annually revised series produced by any agency. The whole issue of seasonal adjustments, which try to account for temporary changes to employment due to a variety of impacts, is entirely too systematic to be taken at face value. The chart below shows the swings between the non-seasonally adjusted and seasonally adjusted data – anything this rhythmic should be questioned rather than taken at face value as “fact.”
As stated, while most economists focus at employment data from one month to the next for clues as to the strength of the economy, it is the “trend” of the data which is far more important to understand.