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Friday, June 1, 2012

May Jobs Report: Terrible? Or Bad Seasonal Adjustments?

The May 2012 jobs report seems terrible; worse than we've seen since last summer.

Yet, upon looking at the "raw" numbers, not the seasonally adjusted numbers, I notice quite an anamo

In unadjusted "raw" numbers, 732,000 MORE people reported themselves as employed in May. This increase adjusted to 422,000 MORE employed people. (This makes sense as May is a hiring month.) However, in unadjusted "raw" numbers, employers reported ADDING 789,000 new jobs, which is in line with the 732,000 MORE people reporting themselves as employed. However, the 789,000 new jobs in raw numbers adjusted down to only 69,000 new jobs in total.  (Many of the new jobs are in seasonal industries, such as construction, accommodation, food service.)

What this means is that in real numbers, in numbers of your family, friends, and neighbors getting jobs and going to work, there are actually in the range of 700,000 of them who did so in May.  In "real" numbers, we have about:

  • 100,000 more jobs in construction industries.
  • 200,000 more people in "agricultural and related" industries. 
  • 100,000 more people working in "private households".
  • 200,000 more people who are self-employed
  • 100,000 more who are in "management, business and financial operations"
  • 500,000 more in "service occupations".
  • 140,000 less in "sales".
  • 450,000 less in "office and administrative support" occupations. 
  • 100,000 more in "farming, fishing, and forestry".
  • 240,000 more in construction occupations. 
  • 100,000 more in "installation, maintenance, and repair".
  • 100,000 more in "production" occupations.
  • 50,000 more in "transportation and moving" occupations. 
(Some groups overlap.)

Though the jobs report (Establishment report), which is a sample of jobs numbers from employers, and the household (CPS report), which relies on a scientific survey of 60,000 households in the population conducted by the Census, are never in perfect synch, this seems way, way off.  (It was off in May 2011 as well.)  I don't know why these adjustment factors are so skewed, but perhaps this report isn't as bad as we think it is?

723,000 more people working.  789,000 more jobs.  

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