Employment Situation Normal: All Fouled Up
According to the Bureau of Labor Statistics, nonfarm payroll employment continued to trend up (92,000) in July, and the unemployment rate (4.6 percent) was essentially unchanged. Employment grew in several service-providing industries. Average hourly earnings rose by 6 cents, or 0.3 percent.
Their version of “trending up” clearly means that it continues to be positive. At least, as far as they can tell. The 92,000 increase in July is below the 136,000 average this year, which is below the 186,000 average last year. Some would call that trending down. On the other hand, the number of jobs assumed into existence by the birth/death model was just 26,000 compared to a 2007 average of 110,000 – so based solely on the numbers reported to the BLS this report was actually stronger than others we have seen. Whether the overall report is stronger depends on how accurately the BLS statistical estimates compensates for data they are unable to initially collect.
[...] When it comes to reading financial statements and government statistics, it is a good practice to follow Ronald Reagan’s admonition to “trust, but verify” whenever possible. Many have pointed out the high percentage of US job growth generated by the “birth/death model” in recent years, and I have noted that despite headlines to the contrary even the government’s statistics on job growth look sluggish. [...]