Will Up be Down and Down be Up? Will Good News Be Allowed?
The monthly jobs report is one of the most anticipated reports during a month. The jobs report is created by using data from two data sets: The Current Population Survey (CPS) or Household data and the Current Employment Statistics (CES) or Establishment data. The CPS data includes data on workforce population, full-time jobs, part-time jobs, and the number of unemployed workers. The CES data provides information on the number of workers. Both data sets have seasonally adjusted (SA) and non-seasonally adjusted (NA) components. The seasonal factors change by data set, month, and year, The CPS data set also changes by category (full-time , part-time, and unemployed.)
The important things to consider when discussing the "numbers" are the growth rates, the revisions, and the seasonal factor. The numbers we will receive Friday are the advance numbers for May, the preliminary numbers for April (after one revision,) and the "final" revisions for March (after two revisions.) If the April data is revised downward, as it was last year, that give the May numbers a "boost." Last year the April data was originally reported at 121.838 million. Had that number stood when the May data was released a seasonally adjusted loss would have been reported because the advance May 2016 value was 121.805 million. This would have been a loss of 33,000 jobs and the President's Consecutive Month Streak for Private sector growth would have ended. The Preliminary April value was recorded as 121.780 million - a downward revision of 58,000 workers. The data had to take 58 steps back to move 25 steps forward. The Final value for April was recorded at 121.797 million in the June Jobs Report. The May preliminary number was 121.796 million workers. This net loss of 1000 jobs was missed by almost everyone.The final value for May was reported in the July Jobs Report at 121.791 million.Another loss. Why wasn't it reported in the media?What should we expect this Friday for the May Jobs Report?
The Private Sector Data should record seasonally adjusted an non-seasonally adjusted worker growth. We have added NSA Private Sector Workers every May Since 1980. We have added over 2.5 million jobs since February of this year. We have also added workers each month. The seasonal factor last year was skewed higher than it had been during the prior four years. The higher seasonal factor skewed the SA CES number high.Last year's growth rate seems to have been an anomaly. We normally grow at a rate of at least 0.66% to 0.84% from the April level.The Projected worker growth table reveals if we grow at the rate of May 2015 and used the Mat seasonal factors that we should see 181,000 workers added. We really need to see over 200,000 workers added. If we grow at the rate we did during May 2015 and use the May 2016 seasonal factor then we could see a value of 255,000 workers added. If we grow at the pace of May 2013 and use the seasonal factor from 2013 then we should add 184,000 workers. If we use last year's seasonal factor that value should be reported at 243, 000, Seasonal factors matter. Expect a number over 250,000. We may see a SA CES number over 300,000 reported. Watch the seasonal factor - it may skew low to through water on the success.
Expect Jobs Creation and a drop in Unemployment. The CPS data set is critical to understand. This data set measures full-time and part-time jobs, not workers. This data set measure the non-institutional workforce population and the number of unemployed people. The survey of unemployed workers is different than the weekly unemployment claims data. There is a relationship between the number of people collecting continuing benefits and those who are unemployed according to the CPS. There is not a direct relationship because not everyone receives unemployment benefits. Part-time workers do not receive benefits. People working two jobs who lose one job do not receive benefits. People working seasonal jobs do not receive benefits.
Will we have fewer than 6 Million Unemployed Workers this May - Better than Any May Since May 2003? Last month we had 6.555 million unemployed workers. Most May reports reveal an uptick in unemployment levels. Often unemployment rises through July as more people are reporting that they are looking for work and cannot find work. This year they may be finding work. The continuing claims data from May 13th, the reporting period closest to the collection date for the CPS was 1.7 Million workers. The unemployment rate was approximately 4.5%. and the continuing claims level was 2.1 million for the week of April closest to the CPS collection date was 2.0 million. If only one third of the unemployed people are eligible for unemployment (2.0 million out of 6.55 million) then a similar ratio would yield roughly 5.1 to 5.5 million unemployed workers. We saw a drop in multiple job workers from March to April last month. Those people will not be registered in the unemployment levels.
Could we see the Addition of 1.5 Million Full-time Jobs this month? They could be permanent jobs. They could be seasonal jobs. They could be a mix of seasonal and permanent full-time jobs. We added 1.418 million jobs May of 2010 as we were emerging from the recession. We added 1.451 million full-time jobs during May 2015 as we were heading into the pre-2016 election job market. These are the non-seasonally adjusted data. What is apparent is that we will add full-time jobs.
Will we lose 600,000 to 800,000 Part-time Jobs? We will most certainly lose part-time jobs. We have only added part-time jobs during May during the years 2008 and 2012 - election years. We could see the addition of part-time jobs if employers are testing the waters.
Seasonally Adjusted data could turn Full-time job gains into losses and Part-time losses into gains. The magnitude of the changes are significant. It is possible that we could see more seasonally adjusted unemployed workers lost to the economy and fewer seasonally jobs added to the economy than the non-seasonally adjusted(SA) data would dictate. If this happens then the seasonally adjusted unemployment level could drop and bring down the SA participation rate. The unemployment rate and participation rate normally both increase through July or August. The April NSA Participation rate is already higher than the May 2016 NSA participation rate. Is 63% a possibility in the immediate near future? The seasonal factors for the full-timeand part-time jobs and unemployed workers are all over the place. The combinations and permutations make it virtually impossible to project the potential SA Participation rate.
Some people are predicting doom and gloom. It is as if the economic weathermen and women are not looking out of their windows or climbing out of their permanently lit and climate controlled bunkers. Consumer confidence is rising. There is a shortage of existing homes. People are spending more this April at retail stores than last April. Sales mean we need more people to make those sales and make the things we want to buy.
Expect a huge spike in unadjusted jobs and a drop in unemployment. Expect the number of workers to increase. Expect the seasonal factors to fudge the numbers. Expect the data from last month to be revised upward in order to dampen this month's numbers. Expect Jobs to record an huge increase. Expect those numbers to be reported entirely differently. Expect the unemployment levels and percentage to fall. Remember that unemployed workers are participants and that the seasonal factors could cause a reduction in the SA participation rate even though more people are participating in reality. Up may be reported as down. Someone thinks that we "cannot handle the truth." Look out the window. Come back this Friday and wait for the tweetstorm to begin at 8:30 AM.
It's the economy.