Jobs: Headline Report is a Disaster, Household Survey is a Train Wreck
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 measly gain of 12k jobs which was well below the forecast of 110k jobs. Despite the massive miss, the Household Survey was even worse. The Household Survey reported a job loss of 368k jobs! This is a horrible data point heading into the election next week:
Figure: 1 Primary Report vs Household Survey – Monthly
The miss on the Household Survey is not surprising. It has been the case all year. In fact, this year has been the biggest divergence between the two reports on record, with the Household Survey representing only 18.4% of the total jobs reported by the Headline Report.
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 368k jobs gained in their birth/death assumptions. This means that despite a massive assumption (largest in a year), the BLS still only managed to show job growth of 12k.
Figure: 3 Primary Unadjusted Report With Birth Death Assumptions – Monthly
When zooming out to look at the last several years, this year looks pretty bad. The BLS has essentially assumed 1.25 of the 1.7M jobs gained this year.
Figure: 4 Primary Unadjusted Report With Birth Death Assumptions – Monthly
Digging Into the Report
The 12k jobs was accompanied by a flat unemployment rate of 4.1%. There were significant job losses in Professional Businesses and Manufacturing.
Figure: 5 Change by sector
Jobs by Category
When looking over the last 12-month trend, it is easy to see the awful report more clearly. Every single job category came in below the 12-month trend.
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. August has now been revised down (after being revised up last month) and then the blowout report in September has also been revised down by 31k jobs.
Figure: 8 Revisions
The twelve-month revision trend is negative by 16.2k 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 September, both full-time and part-time job holders lost 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 fell to 62.6%.
Figure: 12 Labor Market Distribution
Conclusion
The jobs reports have been pretty bad all year. The Headline Report has showed some strength, but the Household Survey has been terrible. With the election a few days away, it is surprising this jobs report was not stronger. In either case, whoever becomes President, they will not be inheriting a strong economy.
