Was the October Jobs Report Really as Weak as it Appeared?

Seasonally Adjusted Non-Farm Jobs Change 2013-Present:  Comparison between Griz Method/Simple YoY and BLS Monthly Reports

Source Data:  BLS

Total Nonfarm 2016-11. xlsx

Tot Empl Chng, Seas Adj 2016-11

The October jobs report showed a top line non-farm employment gain of a weak 161k.  But how real is that number.  It certainly refutes my call of well over 200k to be reported.  I hope everyone is expecting huge job reports for October, November and December  Or does it?  Let's look closer.

First the September upward revision to the seasonally adjusted data was huge, from 156k to 191k, and the August 2nd revision up was 9k.  What this means is the September number is up 44k from what was originally reported, since you need to sum the two latest revisions, 9k+35k=44k   Looked at another way the October report showed 144.747MM jobs in September, and the latest report shows 144.791MM jobs for a difference of 44k.   So if we assume October eventually gets a big revision treatment getting the gain closer to 200k as recent trends suggest, that means 200k+44k in revisions gets very close to the 250k+ gain I predicted.  Certainly a 44k upward revision for September was huge and unexpected.

But let's dig even deeper.  Let's actually look at the revisions to the non-adjusted data set.  What we find is the August jobs total was actually adjusted DOWN 3k, while September was adjusted up a whopping 86k.  So if we take the originally reported seasonally adjusted number of 156k and add 86k, that totals 242k.  Which again lines up with my general call of very large months coming.

What does this mean for the future?  My data indicates about 288k jobs are still banked--that haven't shown up in the official seasonally adjusted reports.  However, there is a bit of a wild card.  What is unknown is how real the October number was.  If it is fairly accurate, it indicates hiring in October was very weak at only about a 186k monthly pace, down from about a 205k average the last few months.  So either the October data is foreshadowing very bad things to come, which the weekly unemployment reports are not confirming, or we can expect big numbers to come.  I expect a huge revision upward for October, and possibly a big September revision as well.  November could come in anywhere from 160k to 300k.  But the general theme will be big trailing month revisions and very good chance of a surprising November report.