Jobs: Don’t be confused by the 2M jump in the Household Survey
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
For over a year, we have been commenting on the giant misses in the Household Survey vs the Headline Report. The BLS is hoping to fix that issue in the latest jobs report. An article from Briefing Book provides a deep dive. I will summarize:
- The Household Survey trend has been more accurate in recent years
- The Payroll Report will be revised down to better show employment trends
- There is a one-time jump in the Household Survey due to updated census numbers
- This is NOT a jump in employment, but a jump in population
Bottom line: Household Report has had the correct trend but the population (and not the jobs) needs to be stepped up to reflect higher population numbers, primarily driven by immigration.
With all that said, that is why the chart below shows a massive 2M gain in the Household Survey. Those are not job gains.
Figure: 1 Primary Report vs Household Survey – Monthly
The chart below will also reflect the change discussed above.
Figure: 2 Primary Report vs Household Survey – Annual
Switching to the headline report…
The BLS publishes the data behind their Birth/Death assumptions (formation of new business). In January, there was a very minor drop in jobs from new business. January raw numbers typically see big drops in employment, so the blue bar should not be interpreted as abnormal job losses.
Figure: 3 Primary Unadjusted Report With Birth Death Assumptions – Monthly
Since this year only has one month, the yearly trend is hard to compare.
Figure: 4 Primary Unadjusted Report With Birth Death Assumptions – Monthly
Digging Into the Headline Report
The 143k jobs number was accompanied by a drop in unemployment rate to 4%.
Figure: 5 Change by sector
Jobs by Category
When looking over the last 12-month trend, only 3 categories were above trend (Manufacturing, Other, and Trade).
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. The last three months show mild positive revisions after seeing major downward revisions prior.
Figure: 8 Revisions
Over the last twelve months, jobs have been revised down by about 32k 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. Again, the massive spike in full-time jobs should be ignored.
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 increased slightly to 62.6%.
Figure: 12 Labor Market Distribution
Conclusion
This jobs report is confusing because of the Household Report. Don’t let the numbers mislead you though. The Household report has been more accurate in recent years and has clearly been much weaker than the Headline Report. Make sure to look beyond just the Headline Report if you want to know what’s really going on in the job market.
