The headline seasonally adjusted BLS job growth was above expectations. Last month's meager gains were revised down.
Analyst Opinion of the BLS Employment Situation
The household and establishment surveys were in sync this month. The unemployment rate drop was caused by an insignificant number of people added to the workforce. I consider this report good, but one has mixed feeling while diving into the data – is the glass half full or empty?
The rate of growth for employment significantly improved this month (red line on graph below). This is a year-over-year analysis which has no seasonality issues.
Economic intuitive sectors of employment were very soft.
This month's report internals (comparing household to establishment data sets) was fairly consistent with the household survey showing seasonally adjusted employment improving 156,000 vs the headline establishment number of growing 211,000. The point here is that part of the headlines are from the household survey (such as the unemployment rate) and part is from the establishment survey (job growth). From a survey control point of view – the common element is jobs growth – and if they do not match, your confidence in either survey is diminished. [note that the household survey includes ALL jobs growth, not just non-farm).
The household survey added 12,000 people to the labor force.
The NFIB statement on jobs is at the end of this post.
A summary of the employment situation:
BLS reported: 211K (non-farm) and 194K (non-farm private). Unemployment rate improved 0.1 % to 4.4 %.
ADP reported: 177K (non-farm private)
In Econintersect‘s April 2017 economic forecast released in late March, we estimated non-farm private payroll growth at 110,000 (based on economic potential) and 205,000 (fudged based on current overrun of economic potential);
The market expected (from Bloomberg / Econoday):
| Seasonally Adjusted Data |
Consensus Range |
Consensus |
Actual |
| Nonfarm Payrolls – M/M change |
150,000 to 225,000 |
185,000 |
211,000 |
| Unemployment Rate – Level |
4.5 % to 4.6 % |
4.6 % |
4.4 % |
| Private Payrolls – M/M change |
158,000 to 210,000 |
180,000 |
194,000 |
| Average Hourly Earnings – M/M change |
0.2 % to 0.4 % |
0.3 % |
+0.3 % |
| Average Hourly Earnings – Y/Y change |
2.7 % to 2.9 % |
2.7 % |
+2.5 % |
| Av Workweek – All Employees |
|
34.4 hrs |
34.4 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 grew 995,000 – slightly below average for times of economic expansion – and the worst showing since 2013.
The comparing the jobs gains this month with the same month historically:
Last month's headline employment gains were revised down. Generally speaking, employment is overstated when the economy is slowing and understated when the economy is accelerating.
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 was 4.4 % with the U-6 “all in” unemployment rate (including those working part time who want a full time job) improved 0.3 % to 8.6 %. These numbers are volatile as they are created from the household survey.
