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Nonfarm Payrolls Not Seasonally Adjusted Tell the Real Story – Unspinning Wall Street™

Not seasonally adjusted nonfarm payrolls, that is, the actual numbers, give us a truer picture of the jobs market than the seasonally adjusted garbage that Wall Street spews.

Friday’s seasonally adjusted nonfarm payrolls jobs headline numbers disappointed investors with slower than expected growth. But was it really that bad?

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Here’s How The Street Spun It – Wall Street Journal

Modest August Job Growth Shows Economy Expanding, but Slowly

Employers added 130,000 nonfarm jobs, jobless rate held steady at 3.7%

U.S. employment grew only modestly in August, suggesting that a global economic slowdown isn’t driving the U.S. into recession but has dented growth.

The U.S. economy added 130,000 payrolls in August, the Labor Department reported Friday, and has averaged 156,000 new jobs a month over the past three. That was down from average growth of 190,000 a month in the eight years since employment started picking up after the last recession. The August tally was propped up in part by the addition of 25,000 temporary Census Bureau workers…


The Journal’s sister publication under dirty old man Murdoch’s smelly trenchcoat,, said that the number would push the Fed to cut interest rates again. The token liberal among dirty old Rupert’s organs also noted the analyst miss. Marketwatch blamed the trade war, of course, and noted that Census Bureau hiring padded the number.

U.S. creates just 130,000 new jobs in August, keeping Fed on track to cut rates

The economy added just 130,000 new jobs in August, marking the smallest increase in three months and offering more evidence that hiring has slowed amid a broadening trade dispute with China that’s disrupted the U.S. and global economies.

The soft employment figures are all but certain to keep the Federal Reserve on track to cut interest rates later this month, even after another sharp increase in wages. Hiring fell well short of the 170,000 MarketWatch forecast.

The gain in new jobs was even weaker if hiring tied to the upcoming U.S. Census is stripped out.

But How Bad Were Not Seasonally Adjusted NonFarm Payrolls?

So how bad was it really? Let’s strip out the seasonal adjustment (SA) hocus pocus that often gives an inaccurate impression of reality initially. The BLS will adjust the current number for this month 7 times over the next 5 years until it reaches its final fix that closely resembles the actual trend. But today? Who knows if it’s accurate?

We know. By looking at the not seasonally adjusted (NSA), actual numbers and graphing them, we can see for ourselves exactly what the trend is doing. We can also analyze and draw conclusions about current performance by comparing the actual month to month and year to year rates of change with the same month for the previous 10 years. In that way we can tell exactly how good or bad the month was without applying statistically manipulated guesswork.

Obviously, the BLS would never manipulate data to suit the needs of its master. That would be like directing the National Weather Service to report something other than the actual weather to appease the dear leader! Couldn’t happen.

Growth Rate Slows But Uptrend Still Intact

Nonfarm Payrolls Not Seasonally Adjusted

The actual month to month change for August was a gain of 348,000 or 0.2%. The average August gain over the prior 10 years was 268,000. In case you’re wondering, except for 2009, those were all recovery years. This August was the fifth best relative to that period. In other words, it was right smack in the middle of the August gains since 2009.

So what’s the big deal?

The year to year gain was defintely slower than it has been. It was 2.06 million or +1.38%. That was the slowest growth rate in 2 years, which you can see on the annual rate of change indicator in the lower half of the chart. Clearly, momentum is slowing. 

Jobs Growth Momentum – Bent But Not Broke

Here’s where it gets interesting. Momentum is slowing, but it is not below the range of the past 8 years. A weaker month next month would be, and that might signal recession. But a bounce would signal that the slow growth status quo is holding.

It’s also interesting that throughout 2018 when the Fed was steadily raising rates, jobs growth was accelerating. It only began to slow when the Fed signaled in January that it would cut rates. That slowing has continued as the rate cut noise grew, and as the Fed did, in fact, cut rates.

We’ve covered this before and, yes, this is how it always works. Employers take their cues from interest rate signals. When rates are rising, it encourages consumers to spend and businesses to hire, until rates become punitive. We never got close to punitive rates.

But when rates are falling, economic decision makers pull in their horns. That’s what appears to be happening this year. The economy is slowing down because the Fed is acting like it thinks it will slow down. Business monkey see, monkey do.

Equally interesting is the booming growth in withholding tax collections. There’s been a total disconnect between huge gains in withholding taxes and tepid jobs growth. Is something amiss with the jobs data? Are they understating it on purpose just to get the Fed to cut rates? I cover that a couple times a month in the Liquidity Trader reports on Federal tax collections and other real time, unmanipulated economic data. I’ll have a new update later this week.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. 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 sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? 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. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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