Jobs: Is a Strong Jobs Report Tied to an Upcoming Election?

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 BLS reported a gain of 254k jobs which blew past expectations. Despite the large beat, the number still came in south of the Household Survey which reported a whopping 430k jobs. As the numbers below show, this was a surprisingly strong jobs report. Is it coincidental that this is one of the last major reports before the election and also happens to be one of the strongest in a year? When the numbers are revised down post-election, no one will even notice. For now, let’s look at the data we have available:

Figure: 1 Primary Report vs Household Survey – Monthly

Despite the massive beat in the Household Survey, when looked year to date, the Household Survey is still well below the Headline number by the largest margin in over 14 years. The Headline Report is 1.8M vs the Household Survey showing 681k, representing 37.8%.

Figure: 2 Primary Report vs Household Survey – Annual

The BLS also publishes the data behind their Birth/Death assumptions (formation of new business). In September, the BLS assumed 128k jobs lost in their birth/death assumptions. This means that despite the big beat, the BLS was actually making assumptions of job losses due to new/closing businesses.

Figure: 3 Primary Unadjusted Report With Birth Death Assumptions – Monthly

When zooming out to look at the last several years, the picture changes. In this case, the BLS has essentially assumed the creation of ALL jobs YTD.

Figure: 4 Primary Unadjusted Report With Birth Death Assumptions – Monthly

Digging Into the Report

The 254k jobs was accompanied by an unemployment rate falling to 4.1%.

Figure: 5 Change by sector

Jobs by Category

When looking over the last 12-month trend, Leisure/Hospitality was the big beat this month – almost tripling the recent average.

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 in recent months. There have been significant downward revisions since January of this year. July and August are both showing modest revisions upward, but it does not make up for the massive downward revision in June.

Figure: 8 Revisions

The three-month revision trend is still negative by 29.7k jobs per month.

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. In August, all of the jobs that were added were full-time jobs, with the economy even losing some part-time jobs.

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 stayed steady at 62.7%.

Figure: 12 Labor Market Distribution

Conclusion

While the past several job reports were very weak, and even weaker in the details, this job report was strong across nearly every measure. The question is… will the numbers hold? There is an election coming up in a month. This is possibly the most important jobs report that could influence the election outcome. Is it surprising that this is one of the strongest jobs reports in a year? Probably not… expect downward revisions and adjustments in the months ahead.