- by New Deal democrat
Yesterday I wrote that the blockbuster January jobs report was essentially the result of two factors: (1) a very low number of potential applicants in the jobs pool with an unemployment rate well under 4% meant that employers were reluctant to let go of workers, which especially impacted the numbers, which particular showed up as (2) the seasonal adjustments expected about 2,000,000 people to be laid off in January, but only 1,600,000 were, as some employers elected to keep Holiday hires on the payroll; also, you can’t fire the people in January that you didn’t hire for seasonal help in October through December.
Secondly, in the last several months there has been debate about whether the Household survey has been picking up weakness that was entirely missing in the Establishment survey. Evidence for this was indicated by an estimate from the Philadelphia Fed, based on the QCEW report for Q2 of last year that only 11,000 private sector jobs had been added during that entire 3 month period. This is important because the QCEW is the gold standard for employment reports, consisting of the actual total from 95% of all businesses via unemployment insurance payments. Subsequently the Census Bureau itself updated its “Business Dynamics Survey” through Q2 of last year, which seasonally adjusts about 70% of the QCEW numbers, and reported an outright *loss* of -287,000 jobs in the private sector during that period.
In short, even with the revisions there is a large difference between big Establishment gains in the last 9 months of 2022 vs. tepid ones in the Household report. And the divergence between the Establishment sample and the comprehensive QCEW and BDS jobs census figures for Q2 was not taken into account in the January revisions, and remains.