BLS Jobs Report Ok in December 2012, Nothing Exciting

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The December 2012 BLS jobs report was just ok.

  • the real unadjusted jobs loss comparing the changes between November and December appears to be average historically – and the loss is more than 2011.
  • economic intuitive sectors of employment continues to show a growing economy (albeit slowly).
  • As an overview – the rate of growth of jobs (between 1.7% to 1.8% year-over-year for most of 2012) remains slightly faster than population growth.  However the employment / population ratio is not reflecting this gain and remains stagnant between 58% and 59% since 2010.

A summary of the employment situation:

  • BLS reported: 155K (non-farm) and 168K (non-farm private). Unemployment = 7.8% (up from 7.7% but was revised now to 7.8% – see note below)
  • ADP reported: 215K (non-farm private)
  • Market expected: 150K (non-farm), 145K to 165K (non-farm private), 7.7% unemployment
  • Econintersect‘s Forecast: 135K (non-farm private) based on economic potential
  • The NFIB released a statement (below) saying that small business growth was literally zero in December 2012.

Per the BLS:

Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2008 were subject to revision.

The BLS reports seasonally adjusted data. This data is highly manipulated, and Econintersect believes the unadjusted data gives a clearer picture of the jobs situation. Also, It should be pointed out that the BLS has issued a Preliminary Benchmark Announcement saying they are currently reporting seasonally adjusted non-farm private jobs 453,000 too low (details here).

This report is inconsistent this month between the survey and the establishment surveys.

Non-seasonally adjusted non-farm payrolls fell 103,000 – worse than last year’s November / December fall, but rather typical for the 21st century.

Historical Unadjusted Private Non-Farm Jobs Growth Between November and December (Table B-1, data in thousands)

/images/bls non-adjusted change.PNG

As always, the recent past data (last three months) is revised. The change in total nonfarm payroll employment for November was revised from +146,000 to +171,000.

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

/images/z bls1.png

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


The BLS reported U-3 (headline) unemployment was unchanged with the U-6 “all in” unemployment rate (including those working part time who want a full time job) also unchanged at 14.4%.

BLS U-3 Headline Unemployment (red line, left axis), U-6 All In Unemployment (blue line, left axis), and Median Duration of Unemployment (green line, right axis)

Econintersect has an interpretation of employment supply slack using the BLS unadjusted data base, demonstrated by the graph below.

Employment-Population Ratio

The jobs picture when you view the population as a whole, and with this months improving data seems to be on a gentle improvement trend since the middle of 2011.

  • Econintersect uses employment-populations ratios to monitor the jobless situation. Changes in the base data effect our view of the economy.
  • In the latest BLS report employment-population ratio declined 0.1 to 58.6. The employment-population ratio tells you the percent of the population with a job. Each 0.1% increment represents approximately 300,000 jobs. [Note: these are seasonally adjusted numbers – and we are relying on the BLS to get this seasonal adjustment factor correct]. An unchanged ratio would be telling you that jobs growth was around 150,000 – as this is approximately the new entries to the labor market caused by population growth.

Employment Metrics

The 3 year growth trend is up, and the short term trends are mixed depending on the periods selected – however, it seems the growth trend in 2012 is flat.

Unadjusted Non-Farm Payrolls Year-over-Year Growth

Another way to view employment is to watch the total hours worked which has been been growing at a slower and slower rate since the middle of 2010.

Percent Change Year-over-Year Non-Farm Private Weekly Hours Worked

The bullets below use seasonally adjusted data:

  • Average hours worked (table B-2) was again rose 0.1 to 34.5. A rising number indicates an expanding economy if the employment is also rising. This number has been in a narrow channel several months (now at the high side of the channel).
  • Government employment contracted 13,000 with the Federal Government down 3,000, state governments up 4,000 and local governments down 14,000.
  • The big contributor to employment growth this month was education & health care (65K) and manufacturing (25K).
  • Manufacturing expanded 25,000.
  • The unemployment rate for people between 20 and 24 (Table A-10) jumped from 12.6% to 13.7%. This number is produced by survey and is very volatile.
  • Average hourly earnings (Table B-3) rose 10 cents to $23.73. Wages growth remains in a “less good” trend.

Private Employment: Average Hourly Earnings

Economic Metrics

Economic markers used to benchmark economic growth were ok, and well away from recessionary levels.

The truck employment grew (4.2k), and growth in this sector shows an expanding economy.

Truck Transport Employment – Year-over-Year Change

Temporary help fell marginally 0.6K but remains in the growth range seen during the last 6 months.

Temporary Help Employment – Year-over-Year Change

Econintersect believes the transport sector is a forward indicator. Others look at temporary help as a forward indicator.

Chief economist for the National Federation of Independent Business (NFIB) William C. Dunkelberg released the following statement in advance of this jobs report:

“Job creation in December was essentially zero, although it improved infinitesimally from the November report—but it’s nothing to write home about and certainly not a sign that robust growth is on the horizon.

“The average change in employment per firm increased to 0.03, up from -0.04 workers, with 11 percent of surveyed owners (up 1 point) reporting they added an average of 2.9 workers per firm over the past few months, and 13 percent reducing employment (up 2 points) an average of 1.9 workers (seasonally adjusted). The remaining 76 percent of owners made no net change in employment.  Forty-one percent of the owners hired or tried to hire in the last three months and 33 percent (80 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions.

“Sixteen (16) percent of all owners reported they had hard-to-fill job openings, a drop of 1 point from the previous month. This measure is highly correlated with the unemployment rate, so the NFIB survey anticipates little change in the rate.

“If there is any news in the numbers, it’s the substantial weakening of job creation plans, which fell 4 points, indicating that only (a net) one percent of owners plan to increase employment in the months to come. Not seasonally adjusted, seven percent of owners plan to increase employment at their firm (down 4 points), but 11 percent plan reductions (down 2 points).

“The plunge in job creation plans and the decline in job openings likely reflect the pervasive frustration with Washington policy and the resulting economic uncertainty that peaked in December as Congress took us right to the edge of ‘the cliff.’ With the debt/deficit still a persistent problem, and states and cities struggling to fulfill all of the promises politicians made but did not fund, January is expected to bring disappointment, as most observers expect the beginning of the New Year to be sluggish. The cliff deal did bring some certainty about tax rates and extenders for another year, but the health care act and EPA regulations are now pouring out, providing little comfort about the course of future costs. If the unemployment rate falls, it is likely to be due more to demographics than new job creation which will not be strong, since holiday consumer spending failed to deliver the surge many had hoped for.

“We may have some certainty, but there is little reason to be hopeful. Happy New Year.”

Caveat on the use of BLS Jobs Data

The monthly headline data ends up being significantly revised for months after the initial release – and is subject also to annual revisions. The question remains how seriously can you take the data when first released.

The above graphic (updated through October 2011) is the month-over-month change in employment based on the original headline non-farm employment level and the current stated employment levels at month end. You will note some pretty drastic backward revision for a major economic release the market reacts to in real time.

Econintersect Contributor Jeff Miller has the following description of BLS methodology:

  1. An initial report of a survey of establishments. Even if the survey sample was perfect (and we all know that it is not) and the response rate was 100% (which it is not) the sampling error alone for a 90% confidence interval is +/- 100K jobs.
  2. The report is revised to reflect additional responses over the next two months.
  3. There is an adjustment to account for job creation — much maligned and misunderstood by nearly everyone.
  4. The final data are benchmarked against the state employment data every year. This usually shows that the overall process was very good, but it led to major downward adjustments at the time of the recession. More recently, the BLS estimates have been too low.

Econintersect has repeatedly pointed out questions about how the seasonal adjustment algorithms and data gathering methodology used by the BLS introduce uncertainty into interpretation of month to month changes in employment.

Econintersect believes the simplistic sampling extrapolation technique of ADP yields a far better picture of the employment situation than the complicated, convoluted Bureau of Labor Statistics (BLS) methodology. However, ADP is using a new methodology beginning with the October 2012 data – and only time will tell if their new approach was as good as their old one.

ADP (blue line) versus BLS (red line) – Monthly Jobs Growth Comparison

Because of the differences in methodology, many pundits ignore the ADP numbers – while waiting for the BLS numbers. Although there can be a low correlation in a particular month, the different methodologies tend to balance out, and the correlations are excellent outside of the data turning points. We are now 16 months past the post recession turning point in employment.

However, there is some discussion that neither the ADP or BLS numbers are correct – as both are derived by a sampling methodology. The answer could be that there is no correct answer in real time – and that it is best to look at the trends. As has been noted, all eventually end up correlating.

The BLS uses seasonal adjusted data for its headline numbers. The seasonally adjusted employment data is produced by an algorithm. The following graph which shows unadjusted job growth – seasonal adjustments spread employment growth over the entire year. Employment does not really grow in the second half of the year and always falls significantly in Januarys.

Non-Seasonally Adjusted Employment – Private Sector

There is the proverbial question on what is minimal jobs growth each month required to allow for new entrants to the market. Depending on mindset, this answer varies. According to Investopdia, the number is between 100,000 and 150,000. The Wall Street Journal is citing 125K. Mark Zandi said 150K. Econintersect is going with Mark Zandi’s number:

  • If Econintersect used employment / population ratios to determine the number, the exact number seems to be between 140,000 and 160,000. The graph below uses the historical employment-population ratios to show jobs growth per month if the population was 300 million.

Historical Monthly Jobs Growth Comparison if Population was 300 Million

  • If Econintersect uses employment – population ratios, the correct number would be the number where this ratio improved. Using the graph below, the ratio began to improve starting a little after mid-year. This corresponds to the period where the 12 month rolling average of job gains hit 150,000.

Employment to Population Ratio

Note: The ratio could be fine tuned by adjusting to the ratio of employment to working age population rather than the total population. However, this would not change the big picture that an increase of somewhere around 150,000 (+/-) is needed for the growing population numbers. We have estimated 140k – 160k. The number might possibly be within the range 125k – 175k. Econintersect cannot find reason to support the estimates below 125k.

The question of how changing demographics impact the employment numbers is at the margins of analysis. Econintersect will publish more on this fine tuning going forward, both in-house research and the work of others.

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3 replies on “BLS Jobs Report Ok in December 2012, Nothing Exciting”

  1. Steven,
    The thorough nature of your analysis is appreciated and shows a different picture from what some in the media have tried to portray about an improving economy. There are several issues with relying so completely on BLS data, though, some of which you appear to recognize from comments you’ve made. Seasonally adjusted figures give significant latitude to government statisticians whose estimates are predictive in nature based upon trends the statisticians search for and respond to with limited hard science for their interpretation.
    The Department of Labor has more accurate and fully supported statistics released through a sister agency, the Employment and Training Administration. I’ve posted figures and analysis from real counts, as opposed to the predictive Seasonally Adjusted estimates posted by the BLS, and they show some disturbing divergence.
    The 93.5 million jobs Americans have lost under Obama’s questionable leadership, at best, remains more than 22 million more than lost jobs during George Bush’s second term. There was a discernible turn in the economy from around May 2008 onward, but even BLS predictive statistics didn’t start showing significant jobs losses until shortly ahead of the election in the September to October period. Notable on the DOL’s ETA site is a summary of real, verifiable payroll figures shown nationwide on a quarterly basis that is far more accurate and reliable for what’s transpired in the labor market than the BLS’s limited survey results used for statistical analysis. In many cases, the term analysis should be used lightly, because Seasonally Adjusted figures normally used in releases to the media for public dissemination are highly manipulated. Evidence of an extreme skew and departure from reality became evident after John Hall’s departure ahead of Hilda Solis’ assumption of leadership in the absence of a replacement BLS Commissioner. Obama’s Department of Labor appointed Secretary has a far left-leaning political background and is a staunch supporter of the President who elevated her to national prominence.
    A seriously elevated rate of job losses has been recognizable from the ETA’s counts of first time claimants filing unemployment claims with nation’s 50 state Employment (unemployment) Offices across the country. Just since the election, the 3.5 million jobs lost show an accelerated rate from 2011 during the early stages of a mild recovery, if figures are reviewed like national elections from the first Saturday after the first Tuesday of the month. That’s significant to provide the most comparable period of time, since numbered calendar days show up as different parts of the week from year-to-year. Of course the loss over the past eight weeks was only 62,000 more jobs lost than were lost in 2011 during the specified comparable period. Amazingly, total November and December losses combined were higher this year than during the ugly 2010 November-December holiday period for a year that was exceptionally hard on the nation’s workers who increasingly became former workers and unemployed in incredible numbers. For the record, this year’s final two months showed 3,885,105 first time claimants registering for UI assistance in Offices around the country, while 2010 had just 3,838,689 new claims filed during the same months to end the calendar year.
    In comparison with Bush second term employment numbers, Obama’s shrunken economy has shed more than 108,000 jobs each and every week over his 205 weeks in Office on average above the numbers turned in by his predecessor. On a monthly basis, that’s meant approximately a half million more jobs lost from the economy than the verifiable employment counts under President Bush. For the seven months with 31 days in them, the actual figure stands at 497,352, which certainly rounds easily to a half million.
    One of the truly remarkable signs of the failure of the BLS’ predictive SA counts can be shown in the actual employers’ payroll record summary data with the ETA. Notable at the outset of 2009 was the first quarterly evidence of job losses showing up in the verified national counts after 19 consecutive quarters of job growth under Bush. The real number showed just 16,000 jobs lost from the year’s final quarter, October through December, while the BLS suggested from their survey data that it appeared upward of 1.5 million to their statisticians applying predictive models and, perhaps, personal bias. The deep job losses didn’t really materialize until the second half of 2009, after which 8.3 million jobs disappeared under Obama’s dreadful economy before the first sign of a modest turn appeared in the third quarter of 2011. Even at election time, this Administration was down 5.8 million jobs from the numbers handed to them, according to the ETA’s quarterly real payroll counts. For comparison, Bush numbers show an increase of more than 7 million workers during a time his Administration endured the nation’s most costly attack by enemies of this nation followed by the most devastating natural disaster with 9/11 and Hurricane Katrina, respectively. And actual job growth versus the 5.8 million real jobs lost under Obama shows a healthy 13 million advantage for the Bush years and Americans who were employable and able to find work for most of the first decade of the new millennium.
    There’s far more information and evidence to be found from real counts shown on Since the media won’t do reasonable research any longer, and this Administration has stacked the BLS with significantly biased leadership intent on portraying some sort of positive employment data, one has to do research. I’ve done that on my rockymountainperspective site, specifically to blunt the skew created by the BLS’ reliance on survey data and Seasonally Adjusted figures that are obviously off when real counts appear months later.
    Your analysis is impressive to me, Steven, only it would appear more valuable and accurate if you included ETA data that should weigh more heavily than the predictive survey-based figures offered by the BLS. They’ve become something of a joke to employment experts willing to do the research this Administration hopes no one will, and many former leaders from the highest ranks of the BLS and DOL, along with business leaders such as Jack Welch, have recognized what many Americans stuck in search of jobs have. BLS numbers have increasingly appeared to offer little more than politcal propaganda since the late stages of 2011. Since that was recognizable as just months ahead of the latest Presidential election ramping up, it’s hard not to feel like the BLS’ divergent data from verified, real counts collected by the ETA was strategic and intentionally deceptive for an electorate unwilling to research more accurate and supported data, which doesn’t get the visibility or summary analysis of BLS data released the first Friday of each month.

  2. @dghay21
    maybe a little dialogue would improve my understanding.  
    but to begin, i have real issues with the bls jobs report because it is based on incomplete data when issued – and this incompleteness causes the real time data to be all over the map.  you never know what this report is going to say.  after three months, when all the data is in – the data smooths out.  so this report is actually worthless in real time (inaccurate data is dangerous).  however, throwing the baby out with the bathwater is also wrong – because there are kernels of corn in the crap.
    1) Econintersect concentrates on real time data to try to trend where the economy is going (not where it has been).  if accurate data requires a wait of three months – then it is not a trend tool unless the data is so predictive that 3 month old data is a real tool (say truck transport employment).
    2) we have done several studies using dol unemployment claims.  once claims get under 350,000 to 400,000 – unemployment claims no longer are predictive of economic growth or contraction.  at the current claims level the economy, historically the economy is free to do its own thing.  the current economic dynamics are terrible, so the economy doing its own thing results in a terrible economy.
    3) the current unemployment situation should be compared to reagan’s first term and not bush’s.
    so to continue this dialog, please point me specifically to the data you are describing.

  3. I believe you might find interesting information on the site. I’ve chosen to make direct comparisons and distinctions there between the labor data provided by the ETA versus what’s offered as release material by the BLS. A CNN article about the latest BLS numbers included some worthy discussion with one contributor commenting that 93% or the weekly releases were subsequently adjusted to higher, more damaging figures as far as job losses, and while I hadn’t tried to offer a percentage, I’ve begun keeping careful records of the deception and wording in releases that routinely favor this Administration by four figures to tens of thousands. After adjusting job loss figures upwards in succeeding weeks, the originally underreported figure becomes more than the next underreported figure, often by an amount quite close to the adjusted increase in the initially posted advance rate. Through the Employment and Training Administration, the real counts aren’t even considered “official” until three weeks after the original advance count appears each Thursday morning.
    Personally, I consider the consistent underreporting of jobs losses despicable, and since the first three sentences of the release material focuses on a false number compared against the prior week’s now more accurate adjusted number, the advance news release suggests a consistently better job loss report than what will eventually post as the official count. I think there’s a belief that few readers will look beyond the first few sentences or do any real research. That’s among the things I did on my RockyMountainPerspective site. You can find a summary chart under the Real Unemployment tab, and both the Real Unemployment and 90 Million Jobs Lost tabs include direct links to the ETA site. The ETA offers remarkably little in the way of summary information for their weekly posts, so that’s something I took on myself. The numbers from real counts from each of the nation’s 50 states’ unemployment offices, and employers’ payroll record counts nationwide are too important, partly for their accuracy as real counts, to overlook. It’s interesting that the ETA is a branch of the DOL, just as the BLS is, but one few look to or rely upon for employment data.
    A few links with the data I’ve referred to are included below, as well.

    If you page down on the RMP Real Unemployment page, you’ll find the summarized ETA data with direct comparison of jobs lost on a week-by-week basis from this Administration to the numbers turned in under Bush during each of his terms. I knew the numbers were horrific when I started this project almost five months ago, and they should have been high enough to gain some attention during the election season. Instead, on three sites, the hit counts totaled little more than 10,000. Of course that means my metrics and attempt at an explanation aren’t exactly a guarded secret, but the stunning jobs purge numbers should have reached ten million. And the direct comparison against Bush numbers was something I was curious about and was asked directly about by my younger brother when I started work on the original Excel charts. I think if you follow my explanations and search the detailed government documents specifying parameters and procedures for information gathering by the BLS and ETA, you’re likely to have little trouble recognizing why I value the real counts above the BLS’s survey-based predictive data. It’s deeply flawed and recognized as such by John Hall, the former BLS Commissioner, and Rick Manning, a former Chief of Staff at the Department of Labor.
    Maybe some of the ETA data and summary information will be of interest to you, Steven. Your detailed analysis with graphs and charts from BLS data shows the level of interest you hold, and your explanation shows a healthy skepticism of the BLS numbers. The seasonally adjusted data is especially suspect and shouldn’t be relied upon for much, in my estimation. I think too much of the SA figures are colored more than anyone would care to know with political overtones intended to subtly create an impression this Administration feels it might live with, and in the recent November elections, more specifically, return to office with. While BLS data cannot be fully discounted, as you noted, it generally needs to be considered after reviewing a range of statistical categories from the dozens available with the BLS. And I remain convinced the real counts of job losses and actual employer payroll record numbers posted on a quarterly basis with the ETA are more accurate and reliable than anything calculated using the BLS’ limited survey-based snapshot of the nation’s employment figures.

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