The seasonally adjusted nonfarm payrolls headline number for jobs added in August was 142,000. The consensus guesstimate of Wall Street economists had been for a gain of 223,000. Traders took the “miss” as bullish. There’s just one problem. The impression given by the headline number is wrong. The actual, unadjusted jobs count was right on trend. There was no material deviation whatsoever.
Actual real time withholding tax collections, which I track in the weekly Treasury update, were very strong during the August 12 reference week for the payrolls survey. Based on the strong tax collections and the actual unadjusted jobs count, job growth remained on the same track it has been on in August.
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The actual, not seasonally adjusted data shows that the real conditions on the ground have not deviated one iota from the trend of the past 3 years. The actual year to year gain in nonfarm payrolls of 1.85% was within and still near the top of the growth rate range that has been fairly constant since December 2011.
The actual month to month change was a gain of 327,000, which was weaker than August 2013’s +427,000 but well above the 10 year average for August of a gain of 150,000 jobs. July’s performance had been the strongest July since 2005, so it’s not surprising that a few less jobs were added this August. The July-August 2 month net change was very similar to that of 2012 and 2013. There’s no sign in any of the actual unadjusted counts of a real deviation from trend.
As is often the case, the seasonally manipulated number this month is misleading. The media unfailingly ignores the actual data, and therefore transmits a message which gives a false impression. This is why it is essential to read and analyze the actual data instead of the seasonally adjusted abstraction.
This is only part of the story however. I will post additional charts on the jobs data later. But meanwhile, Thursday’s data on initial claims continued to show a dangerously maladjusted, overheated economy.