05 July 2013

Non-Farm Payrolls Report - Dodgy Seasonality In Search of Goldilocks

Today's Non-Farm Payrolls report was interesting because with the revision to last month we have two months of almost exactly 195,000 jobs added, with 199,000 in the month prior to that.

This is remarkable 'regularity' for three months in hitting what might be termed a 'goldilocks' number: not too hot, not too cold.

There was something that jumped out of the numbers.  The seasonality adjustment deviated enough from the past two June actual adjustments to add 75,000 jobs to the headline number.

As you may recall, at this time of the year, the jobs growth is on the high side in the non-adjusted number because of the huge amount of summer jobs that are added, whether they be in the form of working students or construction work, or the favorite, leisure and hospitality sector for a nation where an increasing number of people will be 'in service.'

A low side factor in adjusting those high numbers in seasonality will result in a much higher 'headline number,' and it does not take all that much since the raw numbers are in the millions and the headline number is in the thousands.

As you may recall I do not sweat the small deviations in the statistics, because that is in the nature of the beast, and averages are simply averages.

But it does appear with this latest rather large deviation that the headline numbers are being 'managed' to some extent.  How much is hard to say because there are certainly a number of variables in deciding what seasonality factor is to be used.  But it smells like the pursuit of a goldilocks result.

This does reinforce my more consistent message that it is the trend that is important, and not the numbers du jour, that are of primary benefit to those who use them to shove prices around in the financial markets. 

And rather than just count the number of jobs of any quality or type, it is probably more useful to look at the median wage.  

There will be no sustainable recovery until most people have jobs that pay a livable wage, and are not subject to the fees and hidden 'bite' of a corrupt financial system and a corporatized healthcare system.

h/t ZH