Seasonal adjustments mess with July jobs report


Is someone screwing around with the nation’s employment data?

A seasonal adjustment change by the Labor Department made job growth in July look a lot worse than it would have been without the change. And, in case you don’t know it, seasonal adjustments aren’t supposed to change by a lot from year to year.

In order to look into this, we have to do a little math.

Pay attention: I’m not going over this again because I probably can’t figure it out a second time.

The Labor Department announced last Friday that the US created 164,000 jobs in July. That’s the figure after seasonal adjustment. That is OK growth, in line with what the “experts” expected, but not exceptional.

But let’s look at the raw numbers, which come before seasonal adjustment. They show that, before the Labor Department applied its seasonal adjustments, there was really a loss of 1.059 million jobs this July.

So, the loss of 1.059 million jobs was seasonally adjusted into a gain of 164,000. The seasonal adjustment was +1.223 million — or the difference between the two figures.

Now, let’s look at how the figures adjusted in July 2018.

The seasonally adjusted growth in the same month of 2018 was 178,000 after revisions. And the raw, not-seasonally adjusted numbers shows there were 1.114 million jobs lost in August 2018.

So, the loss of 1.114 million jobs in August 2018 was seasonally adjusted into a gain of 178,000. (It was first reported as 157,000 jobs, but later revised.) So the seasonal adjustment for the same month last year was +1.292 million.

That’s the long way of saying that the seasonal adjustment wasn’t as helpful this year. The adjustment, in fact, was less beneficial by 69,000 jobs in July 2019. (Subtract this year’s 1.223 million from last year’s 1.292 million.)

Put yet another way, if the seasonal adjustments for July 2018 had been used in July 2019, the headline, after the seasonally adjusted figure you saw last Friday, would have been 69,000 jobs more than the 164,000 that were actually reported.

And 233,000 jobs (the 164,000 reported plus the additional seasonally adjusted figure of 69,000) would have made this August’s employment report a lot more exciting.

I don’t know why the seasonal adjustment changed by this much. But if I were President Trump, I would ask.

[Read More…]