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It's All about Context...The Jobs Report

In June, there was a lot of hoopla about President Obama’s statement that "the private sector is doing fine" when he talked about the May 2012 jobs report. The June 2012 jobs reports created a similarly harsh reaction. Some talking heads are even claiming the U.S. is either headed for a recession or is already in another one.



What do the REAL numbers say? When you examine the actual numbers, you will likely reach a different conclusion.



Every month, there are three separate job reports on U.S. employment:



The U.S. Bureau of Labor Statistics(BLS) establishment survey. This is the larger, higher profile report, but excludesthe self-employed, agricultural workers, and private household workers. This report is always widely reported in the news.



The BLS household survey includes the items excluded from the establishment survey, as well as employment demographics (e.g., age, gender and education).



The ADP National Employment Report®, which estimates total U.S. nonfarm private jobs based on monthly payroll data.



(The news media always reports the establishment survey, but rarely mentions the other two, or any subsequent revisions to the establishment survey. When there is a mention, it does not garner the same degree of attention as the initial establishment report.)



The chart below shows the differences between the two BLS reports (household in red, establishment in black). The establishment survey reported a net increase of 69,000 new jobs in May and 80,000 in June. In contrast, the household survey reported 422,000 in May and 128,000 in June. For the first six months of 2012, the household survey actually showed a net increase of 1.6 million new jobs versus 900,000 on the establishment survey – a difference of over 700,000.






b2ap3_thumbnail_Householdsurvey.jpg

When we dig a little deeper into the BLS establishment report, the private sector added 82,000 jobs in May and 84,000 in June. In contrast, the government cut 13,000 jobs in May and another 4,000 in June. So, the data shows that the private sector is doing much better than generally reported.






b2ap3_thumbnail_chart1.png

This chart compares the BLS private sector numbers (black line) against the ADP private sector numbers (red line). ADP reported 133,000 net new jobs in May and 176,000 in June—also substantially greater than the BLS numbers.

b2ap3_thumbnail_ADP-estimate.jpg







While the household survey and ADP report are materially better than the establishment survey, all three show a slow and steady increase in net total of new jobs created. None of the reports paint a picture of a collapsing job recovery. Moreover, private sector job creation has looked very normal from a historical perspective. It is only the continued loss of government jobs that is dampening the overall jobs recovery.





(As an aside, notice how both charts show a hiring slump during the summer months in both 2010 and 2011. This pattern appears likely to repeat for 2012. You can imagine all the rhetoric from both major political parties about the reasons for this. Both will provide a partial truth to rally their bases, but the REAL truth is always more complex than politicians and pundits would have you believe).



The final chart below shows that weekly unemployment claims continue to decrease. After having peaked in April 2009 with over 600,000, claims are approaching their historic level.





b2ap3_thumbnail_Clear-Bands-Recession.jpg

The data above shows that the general public is only getting a partial truth about the monthly jobs report. When given the full story, people can begin to put things in proper context.



Next time I’ll address the supposed “Coming Recession” and what the detailed data actually indicates.


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