June Job Growth Tops Forecasts But Still Looks Anemic
According to Reuters, June job growth tops forecasts:
Employers added a stronger-than-expected 132,000 new jobs in June and also boosted payrolls more strongly than previously thought in April and May, according to a Labor Department report that underlined a strengthening job market.
Just because economists have low expectations does not mean that higher numbers are a sign of strength. When I look at the year/year change in employment levels, not seasonally adjusted, the current growth rate of about 1.4% looks neither strong nor strengthening.
Classifying the report within my economic taxonomy, however, is tricky. 1.4% doesn’t look good so I am going with bad. But really looking at the last several months the trend is flat, while I offered space for only deteriorating or improving. Since the June growth was (slightly) worse than May’s, I am going with deteriorating. This decision is also due to the fact that more than 100% of the reported change in employment is due to assumptions (the Birth/Death Model) rather than reported data.
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This decision is also due to the fact that more than 100% of the reported change in employment is due to assumptions (the Birth/Death Model) rather than reported data.
This is incorrect. If you read the BLS page you linked to, it even says that B/D adjustments are made prior to seasonal adjustments.
Steve,
Thanks for your comment. I think I may have phrased the paragraph poorly, as double checking the site confirms that my understanding of the B/D Model is correct (even if my explanation is not.) I am probably being confusing by saying the reported change in employment is due to the adjustment… rather than reported data. What I meant by that remark was that the BLS was reporting the change, but businesses were not reporting it to the BLS. The BLS is assuming (but does not really know for sure) that they are there.
But looking at what I said, I also see that I was comparing apples and oranges. Although my analysis was based on year/year change in NSA data, the “more than 100%” comment was reflecting the month/month, seasonally adjusted headline number. A comment linking the two, as I made, is more illustrative than meaningful. A more meaningful look follows:
According to the BLS site, “Note that the the net birth/death figures are not seasonally adjusted, and are applied to not seasonally adjusted monthly employment links to determine the final estimate.”
The B/D adjustments “are applied” to the NSA numbers I used in my analysis. Thus, the year/year NSA change of 1,982,000 jobs includes 1,090,000 jobs that were assumed by the B/D model. To me, the fact that more than one half of the reported (by BLS) jobs created in the last year were not reported to the BLS is even more concerning than a 100% level in a single month. Which again confirms (to me, anyway) my decision to classify the report as “bad and deteriorating” rather than “bad but improving.”
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