The BLS makes positive revisions for a change this month but it widens the huge discrepancy between jobs and employment.

BLS nonfarm payrolls by job sector.

Please consider the Bureau of Labor Statistics Monthly Payroll Report for September.

Initial Thoughts

• A gain of 336,000 is surprisingly strong given economists expectations of 160,000 and an ADP report of a 89,000.
• However, employment only rose by 86,000 and the participation rate (those looking for work or working) did not increase at all.
• For August, employment rose by 222,000 but unemployment rose by 514,000. Over half a million people wanted jobs but couldn’t find them last month.
• The civilian noninstitutional population is 267,428,000. Employment is 161,570,000. That means there are nearly 106 million people age 16 and older who are not working at all.
• Adding 73,000 government jobs is not a plus.
• Because of annual benchmark revisions, the way the BLS reports revisions, and the relatively small sample sizes of monthly jobs reports, we cannot, with strong confidence, suggest these reports portray an accurate picture of either jobs or employment.

Nonfarm Payrolls and Employment Levels

Employment levels and jobs data from the BLS, chart by Mish.

Full time employment is down by 696,000 since June of 2023.

Payrolls vs Employment Gains Since May 2022

• Nonfarm Payrolls: 4,832,000
• Employment Level: +3,271,000
• Full Time Employment: +1,424,000
• Only 45.4 percent of the employment gains for the last 15 months was full time employment.

Of the 894,000 rise in employment in January, 810,000 was due to annual benchmark revisions. And the BLS does not say what months were revised, just poof, here you go. Again, we cannot, with strong confidence, suggest these reports portray an accurate picture of either jobs or employment.

Job Report Details

• Nonfarm Payroll: +336,000 to 156,874,000 – Establishment Survey
• Civilian Non-institutional Population: +215,000 to 267,428,000
• Civilian Labor Force: +90,000 to 167,929,000 – Household Survey
• Participation Rate: +0.0 to 62.8% – Household Survey
• Employment: +86,000 to 161,570,000– Household Survey
• Unemployment: +5,000 to 6,360,000- Household Survey
• Baseline Unemployment Rate: +0.0 to 3.8% – Household Survey
• Not in Labor Force: 124,000 to 99,498,000 – Household Survey
• U-6 unemployment: -0.1 to 7.0% – Household Survey

Change in Nonfarm Payrolls

Monthly Revisions

• The change in total nonfarm payroll employment for July was revised up by 79,000, from+157,000 to +236,000.
• The change for August was revised up by 40,000, from +187,000 to +227,000.
• With these revisions, employment in July and August combined is 119,000 higher than previously reported.

Revisions were positive for a change.

Part-Time Jobs

• Involuntary Part-Time Work: -156,000 to 4,065,000
• Voluntary Part-Time Work: +177,000 to 22,152,000
• Total Full-Time Work: -22,000 to 134,167,000
• Total Part-Time Work: +151,000 to 27,336,000

The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.

In July, full-time employment declined by 585,000. In August, full-time employment declined by 85,000. In September, there’s another decline of 22,000.

Hours and Wages

This data is frequently revised.

• Average weekly hours of all private employees was flat at 34.4 hours.
• Average weekly hours of all private service-providing employees was flat at 33.3 hours.
• Average weekly hours of manufacturers rose 0.1 hours from a negative revision to 40.1 hours.

An overall decline or rise of a tenth of an hour does not sound line much, but with employment at 160 million, it’s more significant than it appears at first glance.

A year ago average total private weekly hours were 34.6 hours. 

Hourly Earnings

This data is also frequently revised. Here are the numbers as reported this month.

Average Hourly Earnings of All Nonfarm Workers rose $0.07 to $33.88. A year ago the average wage was $32.53. That’s a gain of 4.2%.

Average hourly earnings of Production and Nonsupervisory Workers rose $0.06 to $29.06. A year ago the average wage was $27.85. That’s a gain of 4.3%.

Year-over-year wages are finally keeping up with inflation after underperforming for many months. However, the growth in wages is now shrinking. The monthly increased for production workers in September was only 0.2 percent.

Unemployment Rate

BLS unemployment data, chart by Mish

The unemployment rate hit a 50-year low in January and April of 3.4 percent. For the second month, it’s 3.8 percent. That’s the highest since February of 2022.

Alternative Measures of Unemployment

Table A-15 Alternative Measures of Labor, chart from BLS

Table A-15 is where one can find a better approximation of what the unemployment rate really is.

The official unemployment rate is 3.8%.

U-6 is much higher at 7.0%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Some of those dropping out of the labor force retired because they wanted to retire. Some dropped out over Covid fears and never returned. Still others took advantage of a strong stock market and retired early.

The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers.

Birth Death Model

Starting January 2014, I dropped the Birth/Death Model charts from this report.

The birth-death model pertains to the birth and death of corporations not individuals except by implication.

For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid.

The model is wrong at economic turning points and is also heavily revised and thus essentially useless.

Household Survey vs. Payroll Survey

• The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on employer reporting.
• The household survey is a phone survey conducted by the BLS. It measures employment, unemployment and other factors.

If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.

Looking for job openings on Jooble or Monster or in the want ads does not count as “looking for a job”. You need an actual interview or send out a resume.

These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.

Expect a Long But Shallow Recession With Minimal Rise in Unemployment

Given hiring pressures and boomer retirements, I commented on July of 2022 Expect a Long But Shallow Recession With Minimal Unemployment Rise

That has been and accurate assessment of the strength of jobs.

Unlike many others, I still do not expect the unemployment rate will not rise much in the next recession compared to the average recession impact.

Bond Bulls are Getting Crushed in a Relentless Selloff

Meanwhile, due to unexpected economic strength, albeit of a dubious nature, Bond Bulls are Getting Crushed in a Relentless Selloff.

If you are seeing reports of China dumping treasuries as the cause, those reports are flat out wrong. See the above link for discussion.

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