Nonfarm Payrolls Headline Number Misleads Again

Nonfarm Payrolls Bogus Data

The nonfarm payrolls headline number for January was hogwash, thanks to a defective seasonal adjustment (SA) factor.  Here’s how the Wall Street Journal treated the news.

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The WSJ pointed out that “Economists had expected a gain of 189,000 jobs…” so this was a huge miss. The Journal’s reporter added that, “December and January marked the weakest two-month stretch of job growth in three years.” That was not true. December- January 2011 saw payrolls shrink by 3.17 million. Payrolls shrank by 3.14 million in the most recent 2 month stretch.  And January was not to blame for that. December was a worse than average month. January bounced back. 

Nowhere did the WSJ bother to report the facts. Nowhere did they report that the seasonal adjustment factor resulted in a false impression, that the January change in nonfarm payrolls was actually well within the parameters of normal trend growth for the past 10 years. Bloomberg was no better. It also stressed the “miss” and did not bother to analyze or even report the actual, not seasonally manipulated numbers. 

Nonfarm Payrolls Fact- Payrolls Were Perfectly In Line With Trend

I’ve long complained about the media’s exclusive use of seasonally adjusted abstract impressionism. The government does report the actual, not seasonally adjusted data in addition to the seasonally finagled numbers that everyone runs with. Deriving meaningful comparisons from actual data is a lot easier than from seasonally adjusted abstractions.

Here is the actual nonfarm payrolls data from the BLS employer survey.

The survey showed a total of 135.4 million jobs in January. This was the actual, not seasonally adjusted number. January payrolls were down by almost 2.87 million jobs from December. January is always a down month. A decline is not only normal, it’s inevitable. The issue is how the current decline compares with the norms of the past. By that standard, January was an average month. The decline was smaller than in 5 of the past 10 years and larger in 5. It was virtually the same as last year’s January decline of  2.86 million. And it was almost identical to the 10 year average.  

This number does not represent a dip, or slowing of the trend in any way. The US continues to add jobs. It added 2.3 million jobs since January 2013, an average of 193,500 per month. The annual rate of gain was 1.75%. That’s right in line with the range of +1.5% to 1.9% that has been the number in every month since September 2011. There’s just no news here.

Nonfarm Payrolls Chart - Click to enlarge

Nonfarm Payrolls Chart – Click to enlarge

However, never mind the facts, the mainstream media needs to write sensational headlines.  And the stock market, as usual, only reactions to the headlines. We’re back to the theme now where supposedly bad news is good because maybe Janet won’t taper again in March. But by then, the SA numbers should bounce back or the Fedheads will have figured out that the seasonal adjustment factor was bad. So don’t put too much faith in whatever the pundits conclude on the basis of today’s misleading headlines. 

Meanwhile, this isn’t the whole story. I’ll post a report later on the number of full time jobs relative to population growth. The picture there remains bleak. Job growth is merely keeping pace with population. There’s almost no “recovery” of the lost bubble jobs. That’s because fake jobs don’t come back. New fake jobs must be conjured by the latest bubble. The sad part is that many asset bubbles, particularly financial asset bubbles, don’t even spawn many fake bubble jobs. All the benefits fall to the speculators while the numbers of jobless don’t shrink.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both analytical and sales capacities. Prior to starting the Wall Street Examiner I worked as a commercial real estate appraiser in Florida for 15 years. I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. My perspective is not of the Ivory Tower. It is from having my boots on the ground and in the trenches of the industries that I analyze and write about today. 

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