The Complicated U.S. Employment Picture

by Lee Adler, The Wall Street Examiner

Total and Full Time Employment

Updated June 3, 2012

The number of persons employed full time in May rose by 635,000, not seasonally manipulated (from the household survey). That compares with a gain of 774,000 in April 2011.  The average gain in May for the previous 10 years was 797,000. This May’s increase came on the heels of a very poor April which appeared to be a giveback of some of the record gains in March. The March gain of 1.33 million was a record since 2002, and it was multiples of the typical March gain of 289,000. Taking the 3 months from March through May to filter out the weather related gyrations, this year’s gain of 2.05 million was significantly stronger than 2011′s gain of 1.9 million and was well above the prior 10 year average of 1.76 million.

In other words, these numbers were much better than the “sky is falling” headline seasonally adjusted numbers that everyone was moaning and groaning about on Friday. Any time you see that much hysteria over a single data point, it’s usually a good idea to be highly skeptical. Not that any of this has anything to do with stock prices. They may continue lower, but the employment data is not the reason. Fear of the unknown is.My focus is on full time rather than total employment. Part time jobs are nice, and for many that hold them, they are a lifeline, but the important metric here is full time jobs. Without those, we’re dead. Total employment grew far more than full time jobs, as has been the case throughout this “recovery.”

Full Time and Total Employed Long Term View - Click to enlarge

Full Time and Total Employed Long Term View – Click to enlarge

The chart above  gives some perspective on how far total employment and full time employment fell in the first stage of this depression, and how much they have yet to recover. It’s clear that full time employment is lagging badly.

The seasonally adjusted (SA) fiction is really screwing the pooch this month. Seasonally adjusted numbers frequently veer away from reality by the very nature of the arbitrary seasonal adjustment process. Conomists and the media focus almost entirely on this nonsense, which attempts to compare one fictitious number with another fictitious number to derive a fictitious month to month change. Meanwhile they ignore the actual data. I mean, if you’re going to emphasize the seasonally adjusted crap, you could at least check it against the trend of the real data.

The not seasonally adjusted (NSA) data is the actual data. The seasonally adjusted data is absolute fiction, and it frequently over or understates the real rate of change of the trend, and sometimes even goes in the opposite direction of the actual momentum of the trend. The conomic establishment tries to downplay the actual data by calling it “not” data as in “not seasonally adjusted,”  which carries the connotation that somehow “seasonally adjusted” (SA) without the “not” in front of it is the real thing, when the opposite is true.

Mainstream Wall Street and academic  shill conomists cloud and obfuscate the facts by sticking them into a numbers grinder hoping the product will come out as a nice tasting numbers sausage that everyone can eat. Unfortunately, sausage, while tasty, isn’t good for you when it’s your entire diet. And if you actually knew what you were eating, you wouldn’t eat it.

Wall Street and the shillcademic conomists are too lazy or too crooked to do the simple analysis of comparing year to year changes and the monthly rate of change in the real data to past years to get a clear picture of where the trend is headed. It’s so easy to do when the data is placed on a chart.  But unlike technical analysts who actually know how to read patterns and trends in noisy data, the vast majority of shillcademic and Wall Street conomists who sell their souls just to get on TV, have no clue how to to do that. The process is so simple. Maybe that’s the problem. They like complication because they think it puts the truth out of reach of the general public. In reality, the public gets it. It’s the conomists that don’t.

Full Time Employment Short Term View - Click to enlarge

Full Time Employment Short Term View – Click to enlarge

This charts shows the year to year trend line connecting the April data in both series along with the raw actual NSA data, and the SA fiction. Contrary to all the hand wringing Friday over the May jobs data, there’s no evidence of material slowing in either series.

July is usually the peak month for both total and full time employment. Over the previous 10 years, the level of full time employment in May has been, on average, 2.1 million below the previous year’s July level. If the trend is up, this July will be higher than last July. Last year the May number was 1.4 million less than July 2010. This year the May level is already ahead of the level of last July by 875,000. In fact, it broke last July’s level in April. The economy is a couple months ahead of schedule in affirming the uptrend in jobs. Friday’s jobs report was not the disaster that the pundits, the media, and the trading bot Al Gore rhythms seem to believe. Furthermore, the withholding tax data shown below suggests that there’s been a rebound since the April 12 date of the jobs survey data.

Full Time Employment, Stocks, and The Fed - Click to enlarge

Full Time Employment, Stocks, and The Fed – Click to enlarge

Stock market performance is at the mercy of the Fed (0r over the past 12 months the ECB, not shown), and employment follows them both. While at times there’s a lag, the linkage is undeniable.  However, over the past year, the SOMA has not reflected the impact of the Fed’s MBS purchases from the Primary Dealers, a subject which I cover in depth weekly in the Fed Reports. That graph of Fed purchases from the Primary Dealers has been rising steadily since last September.

By cashing out the dealers via these MBS buys, the Fed enables the dealers to buy more Treasuries. The next week, the Treasury spends that cash. That’s how Treasury debt is immediately transformed into economic activity. We all know that it’s fake activity and can only be sustained as long as the Treasury Ponzi remains intact, but the fact is that it does remain intact, and it’s resulting in slow but steady gains in employment, including full time employment over the past year. The game should continue until the Fed picks up the marbles, or until the other players run out of chips, which probably won’t happen as long as everyone is running away from the European gaming tables to play at the US casino.

Average Weekly Earnings

Updated June 3, 2012

Average Weekly Earnings - Click to enlarge

Average Weekly Earnings – Click to enlarge

This data is shocking for May. After a strong gain in April, average weekly earnings collapsed in May. They had risen in April by 3.6% over the past 12 months. In May the annual change dropped to zero. Hourly wages actually rose 1% year over year, so the hourly worker seems to have done better than fee, commission, and management earnings. That’s probably an anomaly.

A 1% gain in hourly wages is still bad. While hourly wages were previously stagnating, they had been rising lately, with the average hourly wage up 2.7% in the 12 months through April. Hours worked were also running positive until May, when they dropped from 34.6 in May 2011 to 34.2 last month. So more people were working in May, but they worked fewer hours and earned less. Excess labor supply is slowly being absorbed, but suppressing earnings in the process. Labor supply absorption too slow to result in any overall improvement in the real unemployment rate.

Source: Wall Street Examiner (

Initial Claims

The following report is an excerpt of the currently updated permanent Employment Charts page which includes the monthly jobs and average earnings data, as well as the Labor Departments Job Openings and Labor Turnover Survey (JOLTS) and real time data on Federal Withholding taxes. The charts on that page are updated as soon as new data becomes available. Bookmark that page for permanent reference.

Updated June 7, 2012

This week’s data on first time unemployment claims ran clearly counter to the recent headline hysteria about jobs.

In the week ended June 2 actual claims (not seasonally finagled) were 325,900 including  the addition of 4,000 claims to adjust for incomplete state counts at the time of  the advance release (current week). The week was stronger than the week ended June 4, 2011 when new claims totaled 366,800.  40,000 fewer people filed first time claims this year than in the same week in 2011.  It was also stronger than the 10 year average claims for this week of 365,400. Claims decreased by 20,400 in the current week this year versus 14,700 for this week in 2011 and a 10 year average decrease  of 19,500.

There’s a lot of week to week volatility in the data. Looking at a two week span, claims decreased by 4,500 versus a decrease of 9,400  in the same 2 weeks in 2011. However, the 10 year average for this 2 week period showed an increase of 18,300. Overall, this week’s data is consistent with the recent trend. On the chart, the slope of the year to year line for this week has been remarkably stable since 2010. The annual rate of decrease in new claims continues to oscillate around the -10% axis. The latest data was down by 11.2% versus 9.5% last week.

This data suggests that the Fed has little rationale to do additional QE, but that it will need to continue the MBS purchase program to keep its balance sheet from shrinking (covered in the Professional Edition Fed Report).

Initial Unemployment Claims - Click to enlarge

Initial Unemployment Claims – Click to enlarge

Plotted on an inverse scale, the correlation of the trend of claims with stock prices is strong. Both are driven by the Fed’s operations with Primary Dealers as covered weekly in the Professional Edition Fed Report.  See also The Conomy Game, a free report. Last week I wrote that the fact that the claims trend was intact suggested that the intermediate downtrend in stock prices should end somewhere between 1160 and 1200 unless there was a significant change in the claims trend over the next 4-8 weeks.  That observation may have already come to fruition.  The Professional Edition Daily Market Updates cover my take on the technical side of the market for those who follow the charts in that regard.

Initial Unemployment Claims and Stock Prices - Click to enlarge

Initial Unemployment Claims and Stock Prices- Click to enlarge

As the number of workers eligible for unemployment compensation has trended upward slightly since 2009, the percentage of workers filing first time claims has continued to decline. Comparing the current week yearly line to the 52 week moving average, the trend appears remarkably stable.

Initial Unemployment Claims Percentage of Total Employed - Click to enlarge

Initial Unemployment Claims Percentage of Total Employed – Click to enlarge

Stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, along with regular updates of the US housing market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Try it risk free for 30 days. Don’t miss another day. Get the research and analysis you need to understand these critical forces. Be prepared. Stay ahead of the herd.  Click this link and begin your risk free trial NOW!

Follow my comments on the markets and economy in real time @Lee_Adler on Twitter!

Available at The Wall Street Examiner

Permanent page for Employment Data Charts

More Economic Charts

More by Lee Adler

Analysis Opinion Investing

Related Articles

Analysis articles about employment