The BLS jobs report headlines from the establishment survey were strong and above expectations. The unadjusted data shows good job growth but slightly less than last year. The household survey shows almost NO job growth. Will the real job situation please stand up?

Putting this month's headline numbers into perspective – the monthly private sector growth is the highest seen since October 2004.

Unadjusted Non-Farm Private Employment – Year-over-Year Change (blue bars) and Year-over-Year Growth Acceleration / Deceleration (red line)

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The unadjusted jobs added month-over-month was marginally weaker than November 2013 (year-over-year comparisons).

economic intuitive sectors of employment were strong.

This month's report internals (comparing household to establishment data sets)were extremely inconsistent with the household survey showing seasonally adjusted employment improvement of 4,000 (nope – not a typo, only four thousand) vs the headline establishment number of 321,000.

A summary of the employment situation:

BLS reported: 321K (non-farm) and 314K (non-farm private). Unemployment unchanged at 5.8%.

ADP reported: 208K (non-farm private)

In Econintersect's November 2014 economic forecast released in late October, we estimated non-farm payroll growth at 170,000 (unadjusted based on economic potential) and 240,000 (fudged based on current overrun of economic potential).

The market expected:

Seasonally Adjusted Data Consensus Range Consensus Actual Nonfarm Payrolls – M/M change 140,000  to 275,000   230,000 321,000 Unemployment Rate – Level 5.7 % to 5.9 % 5.8 % 5.8 % Private Payrolls – M/M change 205,000  to 260,000 225,000  314,000  Average Hourly Earnings – M/M change 0.2 % to 0.4 % 0.2 % 0.4 % Av Workweek – All Employees 34.5 hrs to 34.6 hrs 34.6 hrs 34.6 hrs

 

The BLS reports seasonally adjusted data – manipulated with multiple seasonal adjustment factors, and Econintersect believes the unadjusted data gives a clearer picture of the jobs situation.

Non-seasonally adjusted non-farm payrolls rose 380,000 – slightly lower than one year ago.

Historical Unadjusted Private Non-Farm Jobs Growth Between Octobers and Novembers (Table B-1, data in thousands) – unadjusted (blue line) vs seasonally adjusted (red line)

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Last month's seasonally adjusted employment was revised up (note that the unadjusted data was revised down).

Change in Seasonally Adjusted Non-Farm Payrolls Between Originally Reported (blue bars) and Current Estimates (red bars)

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Most of the analysis below uses unadjusted data, and presents an alternative view to the headline data.

Unemployment

The BLS reported U-3 (headline) unemployment unchanged at 5.8% with the U-6 “all in” unemployment rate (including those working part time who want a full time job) improved 0.1% to 11.4%. These numbers are volatile as they are created from the household survey.