Jobs: Seven Straight Months of Downward Revisions
The analysis below covers the Employment picture released on the first Friday of every month. While most of the attention goes to the Headline Report, it can be helpful to look at the details, revisions, and other reports to get a better gauge of what is really going on.
Current Trends
The jobs report showed a very modest increase of 73k jobs. The bigger news, as always, is the revision of prior months and the household survey.
- Last month was revised down from 147k to 14k
- May was revised down from 139k to 19k
- The July Household survey reported job losses of 260k
These are huge revisions down and a massive deviation in the household report. This is not painting a healthy picture of the economy.
Figure: 1 Primary Report vs Household Survey – Monthly
For the year, the Household Survey is significantly higher due to the data anomaly in January. However, if we removed the data correction in January, the Household Survey would actually show a loss of 790k.
Figure: 2 Primary Report vs Household Survey – Annual
Switching to the headline report…
The BLS publishes the data behind their Birth/Death assumptions (formation of new business). In July, there were 257k jobs assumed into existence. Without these jobs assumed into existence, it is very likely that the jobs report this month would have been negative.
Figure: 3 Primary Unadjusted Report With Birth Death Assumptions – Monthly
For the year, the birth death assumption is positive against a negative number for actuals (-1.6M).
Figure: 4 Primary Unadjusted Report With Birth Death Assumptions – Monthly
Digging Into the Headline Report
The 73k jobs number was accompanied by a rise in the unemployment rate to 4.2%.
Figure: 5 Change by sector
Jobs by Category
When looking at the last 12-month trend, only one category was above trend: Education and Health.
Figure: 6 Current vs TTM
The table below shows a detailed breakdown of the numbers.
Figure: 7 Labor Market Detail
Revisions
The chart below shows how the jobs data has been revised. So far, every month this year has been revised lower by a significant margin, with May and June showing massive revisions down as highlighted above.
Figure: 8 Revisions
Over the last twelve months, jobs have been revised down by about 33k per month and revised lower by 56k over the last three months!
Figure: 9 Revisions
More Detail in the Household Survey
Another level of detail in the Household report shows full-time vs part-time job holders. This month shows that full-time jobs were lost while part-time were gained.
Figure: 10 Full Time vs Part Time
Historical Perspective
The chart below shows data going back to 1955.
Figure: 11 Historical Labor Market
The labor force participation rate is still well below the highs before the Global Financial Crisis. This month it increased slightly to 62.2%.
Figure: 12 Labor Market Distribution
Conclusion
No doubt, the two major takeaways from this report are:
- Job revisions show a much weaker economy
- The Household Report continues to come in well below the Headline Report
When looking at an already weak jobs report, these two additional facts paint an even bleaker picture than what is being presented on the surface.
