Initial Reaction
Today’s employment report shows a robust increase of 227,000 jobs. The good news stops there. The rest of the report was horrific.
The big news is in employment where the three-month trend worsened.
In the last three months, employment has only risen by a grand total of 33,000. Employment in January declined by 30,000. For the entire year, employment rose by only 1,548,000. The average increase from a year ago is only 129,000 per month.
These trends have now gone on long enough they should not be ignored. But they are.
Instead, media is gaga over the beat-the-street headline number of +227,000 jobs.
Revisions
Last month, the BLS revised the increase in November jobs vs. October to 204,000 from 178,000. This month, the BLS revised the increase in November jobs from October all the way down to 164,000.
In the past two months, the BLS revised the increase in October jobs vs. September from 161,000 to 142,000 to 135,000. The BLS revised the October increase a third time this month down to 124,000 from the originally reported 161,000.
On the positive side, the BLS revised the increase in September jobs vs. August from 208,000 to 249,000.
Let’s dive into the details in the BLS Employment Situation Summary, unofficially called the Jobs Report.
BLS Jobs Statistics at a Glance
- Nonfarm Payroll: +227,000 – Establishment Survey
- Employment: -30,000 – Household Survey
- Unemployment: +106,000 – Household Survey
- Involuntary Part-Time Work: +242,000 – Household Survey
- Voluntary Part-Time Work: +236,000 – Household Survey
- Baseline Unemployment Rate: +0.1 to 4.8% – Household Survey
- U-6 unemployment: +0.2 to 9.4% – Household Survey
- Civilian Non-institutional Population: -660,000
- Civilian Labor Force: +76,000 – Household Survey
- Not in Labor Force: +264,000 – Household Survey
- Participation Rate: +0.2 to 62.9 – Household Survey
Employment Report Statement
Total nonfarm payroll employment increased by 227,000 in January, and the unemployment rate was little changed at 4.8 percent. Job gains occurred in retail trade, construction, and financial activities.
Unemployment Rate – Seasonally Adjusted
Nonfarm Employment Change from Previous Month
Nonfarm Employment Change from Previous Month by Job Type
Hours and Wages
Average weekly hours of all private employees was steady at 34.3 hours. Average weekly hours of all private service-providing employees was steady at 33.3 hours. Average weekly hours of manufacturers rose 0.1 hours to 40.8 hours.
Average hourly earnings of private workers rose $0.04 to $21.84. Average hourly earnings of private service-providing employees rose $0.04 to $21.63. Average hourly earnings of manufacturers rose $0.01 to $20.65.
For discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report. 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. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.
Table 15 BLS Alternate Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
Notice I said “better” approximation not to be confused with “good” approximation.
The official unemployment rate is 4.8%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 9.4%. 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. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.
Strength is Relative
It’s important to put the jobs numbers into proper perspective.
- In the household survey, if you work as little as 1 hour a week, even selling trinkets on EBay, you are considered employed.
- In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
- In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.
Household Survey vs. Payroll Survey
The payroll survey (sometimes called the establishment survey) is the headline jobs number, generally released the first Friday of every month. It is based on employer reporting.
The household survey is a phone survey conducted by the BLS. It measures unemployment and many 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 jobs on Monster 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.
Final Thoughts
This report was shockingly bad. Employment growth was +129,000 on average from a year ago, +79,000 per month since March, and only +11,000 per month for the last three months.
Employment has stalled.
Mike “Mish” Shedlock
Common Mish. With truthiness like that, you are going to impair the marketability of all those million dollar crap shacks.
“The rest of the report was horrific.” As MISH writhes on the floor in ecstasy.
Get a grip on yourself Jim
Deceptive jobs accounting.
Show a high number in the month under review and everyone celebrates. People tend to ignore the downward revision in the month prior to the month being reviewed.This goes on farcically every month and the stock markets have a great excuse to lurch forward. Is there no honesty left at all?
No. Absolutely none.
“Treat the stock exchange like a cold shower (quick in, quick out).”
~ a traditional maxim of the Rothschild family.
Opposite of Buffett, but the Rothschild family is way richer.
CJ…think they said that,when they were still sending ‘Carrier’ Pigeons from France to England…lololol
Are you referring to Waterloo, Nik? That was in the Netherlands, now part of Belgium.
And the Rothschild investment windfall related to that was in bonds, not stocks.
I thought the report was pretty good. We added some manufacturing jobs and lost 10,000 government jobs.
All jobs are not equal. If we could loose 10,000 government jobs a month that might allow the productive sector to flourish. Government jobs are about 22 million!! I would argue that these jobs are counter productive to economic growth and prosperity.
A good first step for 2017 economic growth.
except… only 183 years to go.
Relax. This is the last report to blame on Obama [lol]. Trump will expand robot jobs in the USA!
Hope for lots of robots. Plus we need to make those robots and all sorts of computer numerical control stuff right here in the USA.
Would love to see an aggressive border tax phased in soon.
Trump to Mexico: Pay me $60 billion now and get a 3 year hiatus on the 20% border tax on our $300+ billion imports from you guys.
Mexico: Whew, here is the check
It might be an added help to take a 10 year historical look at the chart below “Employed, Usually Full Time”
According to FRED data here : https://fred.stlouisfed.org/series/LNS12500000
Jan 07: 121.609 Million
Jan 17: 124.705 Million
An increase of 3.546 million people over 10 years
US Population in 2006 was 298.4m. This jumped to 324.118m in 2016 for an increase of 25.718 milloin
So the nutshell is that the US population grew by 25.7m over the last 10 years while full time employment grew by 3.546m over the same period. NOT GOOD.
Moreover, i bet a sizeable chunk of those 3.546 new employees are Asian and East Indian employees working for Fortune 500 companies in bi coastal cities and NOT employees working for new small businesses (America’s traditional growth engine).
Percentages are your friend. Try using them!
You should not expect any one-to-one correlation between population growth and new jobs over the last 10 years because many jobs have and continue to be subsumed by automation and robotic replacement. There was also an awful lot of job loss and consolidation after the Great Recession.
Was job growth not the point of the discussion ? What better 1 on 1 correlation is there than population and job growth ? Is 10 years not long enough ?
You clearly have a problem understanding what I wrote. Let me bring down the grade level: Robots been taking the jobs, bro.
Hi Akid–“US Population in 2006 was 298.4m. This jumped to 324.118m in 2016 for an increase of 25.718 milloin”
is interesting but not relevant.
How many of those were 18-62 (prime working years), and not in school?
That is, what *actually* is the realistic labor force? The BLS stats for “labor force” is 16-death. I don’t know many 80 year olds that are wanting to work, even if the BLS wants them to. You can see current stats here: https://www.bls.gov/cps/cpsaat03.htm.
No, you did not sleep through an outbreak of the plague. The 660,000 person drop in population is due to an annual update from the Census Bureau. From the BLS report: “The change in population reflected in the new estimates results from adjustments for net international migration, updated vital statistics, and estimation methodology improvements.”
Consult a recovering alcoholic, he can tell you how it feels when you withdraw the drinks.
Remember that this is the annual adjustment month — and magically, about 660,000 assumed labor-force entrants over the last 12 months disappeared when the labor force entrant rate was normed back against the annual census adjustment.
The adjustments to previous data indicate that the data is quite undependable until much later in hindsight. Which means it is not very useful at all.
I’ve always said they should so a 3 month running average on new jobs instead of this month-by-month number.
This report was shockingly bad. Employment growth was +129,000 on average from a year ago, +79,000 per month since March, and only +11,000 per month for the last three months.
“Shockingly Bad”?? Nice hyperbole there except it wasn’t even horrific. There were 227,000 jobs added and the UE rate ticked up because more people joined the labor force. The emp/pop ratio ticked up 2 tenths as well.
I fail to see where this report was either “Horiffic” or “Shockingly Bad”
If you don’t think 11,000 a month is shockingly bad you are only nuts
Mish — Exactly how does 227,000- become 11,000??
Need something like 200,000 jobs per month just to keep up with population growth.
The total number employed in the age group of 25-54 is 97,656…almost identical to that of August of the year 2000!
https://fred.stlouisfed.org/series/LNU02000060
I have a real problem trusting ANY of the BLS statistics. The massaging and revisions render most meaningless.
Does anyone think jobs will really come back in a big way ? Today it looks like importation of labor via H1b and l1 visas is going to be halted dead in its tracks. I expect those on these visas to soon be deported when their visa magically expires by executive order. I think the net net will be similar after a year of a trump. More citizens will be employed and no labor will he imported until all citizens are gainfully employed. But wages won’t change much and standards of living will stay the same. Corporations aren’t going to create jobs if their profits are stagnating or at risk of going down under Trump.
Good analysis Mish, commensurate with a weakening economy. The figure that I found astonishing was the add to retail when all the department stores are laying off tens of thousands not counting the collateral damage to surrounding shops in the malls where their branches are closing. The Gallup Good Job Index is falling sharply and it seems to track reality better than does the BLS. I always wondered who schooled the Chinese statisticians, suspect it was the BLS.
What I know from my manager trying to fill temp and perm engineering position is in the past 12 months one candidate cancelled and on-site interview immediately after accepting an offer with another company. A second candidate stood up my manager for a phone screen. I’ve been plugging the holes with copious overtime and juggling multiple projects daily.
It’s not the amount of work that is driving me to look elsewhere; it’s the chaotic environment the management team refuses to fix. I opened my job search January 1st. Within 2 weeks I received numerous unsolicited job postings. Two or three were worth inquiring. The recruiter submitted my resume to a client. Within 24 hours the client decided to schedule a phone interview. Two hours before the phone screen the client put the position on hold since the budget had not been passed. Many jobs are in the defense industry and require a clearance. I worked Mil/DoD and did not like the environment.
All this points to a transition from a seller’s market to a buyer’s market, to no market very quickly as private companies get scared about the economy. Government contractor related jobs are still available, but I doubt they will last long.
Position put “on hold” is usually a BS explanation similar to we will keep your resume on file.
If the BLS was a publicly traded company and I was a securities analyst, I would suspect them of jiggering the inventory numbers to manipulate the cost of goods sold and profit numbers.
I don’t have the time to do that analysis, so thanks for providing it, Mish!
Do we know how many people dropped off the radar?
Mish,
Where are you getting 30K average job gains in the latest three months?
If you are using the household data, you are severely mistaken. BLS reported that the January change would have been +457K rather than -30K without the distorting effect of the annual population control, which creates an “apples and oranges” effect as it is not applied retroactively. And, the December gain in the household survey was 63K and November was 146K. So, the average of the three is 222K. Even accepting the -30K for January not corrected for the effect of the population control (which is just plain incorrect from a statistical point of view) the average is 60K, not 33K.
I has +11,000 average in the last 3 months
-30,000 in the last month
I am aware of the census change – how do you want to apportion them?
Data is so screwed up hard to say. But that +475,000 is nonsense
I talked about it here:
https://mishtalk.com/2017/02/07/gdpnow-creator-responds-to-question-on-employment/
Year-over-year and since March, show a marked slowdown