By the Numbers
Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.
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Today’s headlines included a gain of 267,000 private-sector payroll jobs in January, with November and December gains revised upward to 414,000 and 320,000, respectively. There is no question that job growth has improved over the past six months and that the economy as a whole has improved in line. However, there are some details of the release worth pointing out.
The accompanying chart shows monthly gains in the “core” jobs measure regularly reported here: private-sector jobs less construction and retailing. We abstract from construction and retailing because of their extraordinarily short-term and seasonal volatility, not because of any trends in either direction. The chart shows a slowing in “underlying” jobs around the time of the 2013/14 polar vortex followed by a spring rebound and another bounce in jobs starting in November 2014. Common commentary has it that job growth was strong throughout 2014, but much of the spring bounce was merely payback from weather-restrained data earlier. The gains since November 2014 are a clear departure from previous trends.
The green line in the chart shows this series before today’s benchmark revisions (back to 2008). It is notable that there were no substantial upward revisions to the 2013/14 data announced today. Our core jobs measure was revised upward by only 22,000 after a downward revision a year ago (disguised by the Bureau of Labor Statistics’ redefinition of the payroll series).
While seasonally adjusted data for core jobs showed upward revisions for November and December of 54,000 and 84,000, respectively, the revisions to the data before seasonal adjustment were -5,000 and +84,000, respectively. So, most of the revisions to recent data were changes in seasonal adjustment, not in actual job growth. Then again, increasing seasonal adds to one part of the year means reducing it over the rest of the year.
The accompanying table shows key sectors before and after seasonal adjustment. It should be clear from the table that with all the seasonal swings this time of year, it is hard to know just what is really going on.