The January Employment Report — And an Illegal Immigration-Related Issue

Advance estimates:

• ADP, in its monthly report, says that “Nonfarm private employment grew 130,000 from December 2007 to January of 2008 on a seasonally adjusted basis.” ADP’s accuracy has been a less-than-perfect barometer, though — at least on a month-by-month basis.
• Predictions: Apparently the consensus is about +80,000, based on this Chicago Tribune quote — “The latest employment surveys from other sources are inconclusive. The January count of private employment by Automatic Data Processing showed a surprising gain of 130,000, which implies a total jobs gain of 160,000. That’s more than twice the average estimate of economists.”
• The full ADP report (PDF) has this stunner — “January’s increase of 130,000 is consistent with nonfarm private employment growth that averaged 110,000 during the three-month period from October through December 2007.” Those increases are a lot greater than BLS has reported in the past few months, which makes you wonder if there will be significant upward prior-month revisions.

The actual report from the Bureau of Labor Statistics arrives at 8:30. Here’s where it will be is:

Both nonfarm payroll employment, at 138.1 million, and the unemployment rate, at 4.9 percent, were essentially unchanged in January, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The small January movement in nonfarm payroll employment (-17,000) reflected declines in construction and manufacturing and job growth in health care. Average hourly earnings rose by 4 cents, or 0.2 percent, over the month.

I would say that the ADP folks have some explaining to do.

Digging into the detail:

• BLS’s claim that “The number of unemployed persons (7.6 million) and the unemployment rate (4.9 percent) were essentially unchanged in January” is pretty strange. The reported number of unemployed dropped by 79,000 (from 7.655 million to 7.576 million). That’s not minor. Which MoveOnster at BLS wrote that?
• Prior-month revisions are significant, but, though I thought otherwise earlier, don’t net out to much. December’s original +18,000 was adjusted up to +82,000 (a +64 net change), while November’s went down to +60,000 from +115,000 (a loss of 55).
• So the number of estimated number of additional Americans working at the end of January was 8,000 fewer (-17+64-55) than it was thought to be at the end of December.

That’s pretty weak.

Can’t help but wonder how much validity there might be to the following:

• The Household Survey element of the BLS report shows that the civilian labor force has actually contracted by 4,000 in the last two months.
• At the same time, the unemployment rate and the number of unemployed went down in December.
• Keep in mind that BLS doesn’t inquire as to legal status in its Household Survey questions. Therefore, the reported civilian workforce is designed to capture all who could be working — legal AND illegal.
• If (emphasis “if”) these are indicators that the illegal-immigrant population has stopped increasing or is perhaps even decreasing (for an example, see Oklahoma; also see this), it may be that despite weak fourth quarter GDP growth, per-capita and/or per-household GDP based on the country’s real, all-inclusive population, including illegals, are still going up nicely.
• If that’s the case, wouldn’t that be a more important measurement than overall GDP, especially in the current situation?

Unfortunately, I don’t see how you could get definitive answers to the the issue I’ve just raised.