Note to Mish: The BLS Added About 145,897 Imaginary Jobs to the Non-Farm Payrolls Headline Number
by ilene - July 2nd, 2010 10:30 pm
Note to Mish: The BLS Added About 145,897 Imaginary Jobs to the Non-Farm Payrolls Headline Number
Courtesy of JESSE’S CAFÉ AMÉRICAIN
I like Mish Shedlock. He has intellectual integrity, and even when we occasionally disagree, as I recall over the inevitability of deflation and some of its particular consequences and manifestations, I listen to his arguments carefully. He draws conclusions that are difficult to fault. Most of the time we seem to be in agreement.
In his most recent blog, he indirectly poses an interesting question.
"Hidden beneath the surface the BLS Black Box – Birth Death Model added 145,000 jobs. However, as I have pointed out many times before, the Birth/Death numbers cannot be subtracted straight up to get a raw number. It contributed to this month’s employment total for sure, but the BLS will not disclose by how much."
Mish Shedlock, Jobs Decrease by 125,000
Here are the Imaginary Jobs added to the Non Farm Payrolls from the Birth Death Model of the BLS. As Mish reminds us, (thank you Mish. I have been nagging bloggers about this for years), the Imaginary Jobs are added to the unadjusted payroll numbers, which are dramatically impacted by the seasonal adjustments, which are sometimes quite significant.
I include this second chart show the Birth – Death numbers over time to show the historical trend. It is remarkable how ‘regular’ this number has been over the past six years despite an epic recession that devastated small businesses, which is purportedly what this model tracks.
Here is a visual depiction of the Seasonally Adjusted and the Unadjusted Non-Farm Payroll Numbers. As you can see, the adjustment is sometimes very significant. Remember, the Birth Death imaginary jobs are added to the unadjusted number, which is indicated in maroon on this chart.
So obviously one can calculate the ‘seasonality factor’ using a simple formula
Seasonality Factor (SF) = Seasonally Adjusted Number (SA) / Non-Seasonally Adjusted Number (NSA)
I do this each month in the Payrolls Spreadsheet that I maintain. I like to see if the BLS changes its calculations and assumptions over time, especially when they do major revisions.
And although I have never shown it in this blog before, it is relatively…
Jobs Decrease by 125,000, Rise by 100,000 Excluding Census; Unemployment Rate Drops to 9.5%; A Look at the Details
by ilene - July 2nd, 2010 4:30 pm
Jobs Decrease by 125,000, Rise by 100,000 Excluding Census; Unemployment Rate Drops to 9.5%; A Look at the Details
This morning the BLS reported a decrease of 125,000 jobs. However, that reflects a decrease 225,000 temporary census workers. Last month there was an increase of 411,000 temporary census workers. Next month will also likely be negative due to the dismissal of more temporary workers.
Excluding the census effect, the economy added 100,000 jobs but interestingly 20,500 of them were private temporary jobs. Temporary jobs have become a way of life.
Excluding the census effect, government added 17,000 jobs. That is going to change in the coming months (possibly dramatically depending on Congressional stimulus actions) as states are forced to layoff workers for budgetary reasons.
That will be a good thing because Firing Public Union Workers Creates Jobs. Unfortunately, politicians and Keynesian clown economists will not see it that way.
Hidden beneath the surface the BLS Black Box – Birth Death Model added 145,000 jobs.
However, as I have pointed out many times before, the Birth/Death numbers cannot be subtracted straight up to get a raw number. It contributed to this month’s employment total for sure, but the BLS will not disclose by how much.
On the whole, this was an OK jobs report (depending on your expectations), yet perhaps as good as it gets for a while.
The unemployment rate dropped only because of a declining participation rate. Last month the number of unemployed was 15 million. This month it was 14.6 million. Clearly the economy did not add 400,000 jobs.
The drop in participation rate was not that surprising because (as I expected) some of the long-term unemployed stopped looking jobs, or opted for retirement.
Nonetheless, I still do not think the top in the unemployment rate is in and expect it may rise substantially later this year as the recovery heads into a coma and states are forced to cut back workers.
Employment and Recessions
Calculated risk has a great chart showing the effects of census hiring as well as the extremely weak hiring in this recovery.
click on chart for sharper image
The dotted lines tell the real story about how pathetic a jobs recovery this has been. Bear in mind it has taken $trillions in stimulus to produce this.
June 2010 Report
Please consider the Bureau of Labor Statistics…