Seasonally Adjusted Non-Farm Jobs Change 2013-Present: Comparison between Griz Method/Simple YoY and BLS Monthly Reports
Source Data: BLS
Total Nonfarm 2018-3. xlsx
I've been monitoring the inaccuracy and volatility in the monthly BLS jobs reports for several years now. It is truly amazing to see how wild and inaccurate the monthly reporting of jobs gains is. Hiring is not raging at a 313k/month pace as the most recent report claims. 200k/month is a lot closer to accurate. About the only way to get a meaningful number from the BLS monthly jobs gain reported, is to average 12 months of data, and then the number tracks pretty close to reality.
The above chart makes it pretty clear that up to about December 2014 the monthly BLS report tended to over report jobs gains. But since January 2015 it has been under reporting. That is up to the last 2 months when it appears the BLS is firmly in the over reporting of jobs business again This can be seen by the blue and orange bars tracking pretty close in most months up to December 2014, with the orange bars periodically spiking over the blue. But since January 2015 it the orange more typically track well below the blue. Summing the difference between the orange and blue bars proves this as well.
Notice the massive spike in January 2017 and a corresponding spike in the most recent report, February 2018. Also notice that the official jobs gain numbers came in pathetically low the following 4 months after the blowout January 2017 report. And somehow this massive spike in employment comes with a drastic slowing in wage growth. Really? A massive 50% spike in hiring over where we've been tracking but somehow wages fall?
Let's also look at the latest revisions. January 2018 was revised up about 39k to 239k from 200k, however the raw data, the non seasonally adjusted data set, actually shows a 1000 decrease for January. December was also revised up significantly and the raw data shows about a 28k gain for December 2017. But somehow the official numbers boost January and December by a combined 54k.
I pulled this from a MarketWatch article. “If you had tried to concoct an event that would be good news for the economy and good for the markets, you would come up with the kind of jobs report that we got today: solid headlight number with only moderate wage growth,” said Kristina Hooper, chief global market strategist at Invesco.
I think "concoct an event" sums it up. You think this might be designed to prop up stocks and bonds after a nasty February dip and a volatility surge? I've seen this repeatedly over the last few years, the markets flounder and the BLS comes riding in with the exact report needed for support, whether it be a big number to reverse fears over slower hiring or a weak report to quell fears over the Fed backing out and slowing interest rate hikes. Now we get a massive gain with slowing wage gains, best of both worlds.
To be fair it looks like there might be an improvement in hiring rate to 195k/month over the last 4 months from about 185k, about a 5% improvement. But that is nowhere close to what the 313k number implies.
To be fair it looks like there might be an improvement in hiring rate to 195k/month over the last 4 months from about 185k, about a 5% improvement. But that is nowhere close to what the 313k number implies.
