Employment Stats Misleading

The payroll jobs report for November from the Bureau of Labor Statistics says that the US economy created 203,000 jobs in November. As it takes about 130,000 new jobs each month to keep up with population growth, if the payroll report is correct, then most of the new jobs would have been used up keeping the unemployment rate constant for the growth in the population of working age persons, and about 70,000 of the jobs would have slightly reduced the rate of unemployment.

You Can't Blame The Economy On The Weather

The pathetic jobs report has ushered in a whole new blame game on the weather. January through March 2012 had the warmest temperatures on record for the United States.

Most economic data, including the employment report, is seasonally adjusted. The algorithm is called X-12-ARIMA and is maintained by the Census. Without going into the mathematics, this algorithm takes past cyclical patterns that are predictable and adjusts those spikes, attributed to the seasons. The algorithm takes out of an economic data series those wild swings, so one can more easily compare real growth instead of, say, fall harvesting or Christmas hiring. Construction employment, for example, is highly cyclical due to the nature of the work. Below is a graph of not seasonally adjusted construction employment.

construction nsa

A Peek into the Employment Report Establishment Survey

The BLS establishment survey doesn't get much press love or headline buzz when it comes to the monthly employment statistics, despite the survey's better accuracy than the population survey. For the past year, 1.899 million payroll jobs have been added and payrolls now stand at 132,821,000. From a year ago this is a 1.5% increase. The below pie chart breaks down March 2012 payrolls by major industry's percentage of total employment.

ces march 2012 size