April 4, 2008

Old Media’s Seasonally Ignorant Employment Reporting

Did you know that 574,000 and 1.1 million more Americans had jobs in March than in February and January, respectively?

Seriously (data can be retrieved from this BLS page; select the very first “not seasonally adjusted” table):

BLSrawDataEmployed0108to0308

Now the fact remains, as you can see, that job growth during the past two months is nowhere near as great as it was during the same two months in 2006 (1.91 million) or 2007 (1.58 million). This goes a long way towards explaining why total employment, when adjusted for seasonality, fell 80,000 during March, and by 232,000 during the first quarter.

There’s no denying that the employment situation has been deteriorating for several months, and I’m not trying to minimize that. What I am saying is that the “employees were thrown out on the streets during March” narrative cooked up by Old Media today, including the Associated Press’s Jeannine Aversa, is clearly false, either because Old Media reporters and their editors don’t understand a concept as basic as seasonality, or they don’t want to.

Here are the relevant offending paragraphs from Aversa’s report today (April 8 note — link is to host copy reflecting report as originally seen; original was updated but not saved by AP at its “hosted.ap.org” site; the relevant raw-data job changes are in italics):

Employers buffeted by talk of recession slashed 80,000 jobs in March (actually, employers added a lower-than-usual 574,000 jobs in March) …..

….. Job losses were widespread in March. Construction, manufacturing, retailing, financial services and various business services all racked up losses (actually, every sector noted except manufacturing had gains). That overwhelmed gains elsewhere, including in education and health care, leisure and hospitality as well as in government (this sentence is thus false on its face).

In March, construction companies cut 51,000 jobs (actual was +49,000), factories eliminated 48,000 positions (actual was -19,000), retailers cut payrolls by more than 12,000 (actual was +53,000). Professional and businesses services lost 35,000 jobs (actual was +67,000) and temporary help firms cut nearly 22,000 jobs (actual was +20,000). Financial firms chopped 5,000 jobs (actual was +5,000).

When government hiring was removed, the numbers looked even worse. Private employers shed 98,000 jobs in March (actual was +474,000; 105,000 jobs were added in government during March, vs. the +18,000 seasonally adjusted amount inferred).

Beyond that, there’s the annoying presumption on the part of Aversa and others that job reductions always occur because employers “cut” jobs. If a person leaves his or her job voluntarily or retires and isn’t replaced, did the employer just “cut” or “chop” a job (with the heavy implication that some innocent person was thrown out of work)? Of course.

Naturally, seasonality goes in both directions. For example, in January 2008, there were 1.7 million fewer jobs than in December 2007. This is a normal post-Christmas season occurrence, and further illustrates why seasonally adjusting data is important and necessary.

Again, this isn’t to say that the economy isn’t in a rough patch. But it’s a long way from March’s easily reportable reality — unadjusted job growth occurred, but not as quickly as in previous years, causing seasonally adjusted job growth to be negative — to the patent fiction of “blood on the streets” being foisted on the public today.

Thousands of Old Media outlets already have and will continue to mindlessly relay the job-cut narratives of AP, the New York Times (“Unemployment Rate Rises After 80,000 Jobs Cut”), and others. No doubt politicians leverage it and pile on. But all the newsprint used, all the bandwidth burned, and all the uninformed rhetoric won’t change the fact that in the real world, those cuts simply did not happen.

Cross-posted at NewsBusters.org.

The March Employment Report

Filed under: Economy,Taxes & Government — Tom @ 8:22 am

SEE UPDATES BELOW — Raw-data reports from BLS show large increases in employment, though nowhere near as large as in March 2006 or March 2007.

________________________________________

Advance info:

  • ADP, in its monthly report, says that nonfarm private employment grew 8,000.
  • John Crudele at the New York Post says that “Wall Street thinks” that the economy lost 50,000 jobs.
  • More specifically, per Ken Sweet at Fox Business, “Economists interviewed by Thomson Financial expect the U.S. economy lost 50,000 jobs in March, bringing the nation’s unemployment rate up two notches to 5%.”
  • To show how spread out the guesses are, one economist notes that “In a survey by Bloomberg.com, economist forecast for NFP were in a range of -150k to 65k. The range in the unemployment rate forecasts was 4.7% to 5.1%. The wide range supports the view that the data remains relatively uncertain.” No kidding.

The actual report:

It’s from Uncle Sam’s Bureau of Labor Statistics, and arrives at 8:30. Here’s where it is.

8:30 a.m. — Here’s the first para:

The unemployment rate rose from 4.8 to 5.1 percent in March, and nonfarm payroll employment continued to trend down (-80,000), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Over the past 3 months, payroll employment has declined by 232,000. In March, employment continued to fall in construction, manufacturing, and employment services, while health care, food services, and mining added jobs. Average hourly earnings rose by 5 cents, or 0.3 percent, over the month.

This is basically a bad report from top to bottom, and leads me to believe that first quarter GDP, instead of being a couple of tenths of a percent positive, will might go a couple of tenths negative. (See Update below for some contrarian positivity.)

Digging into the detail:

  • In the Household Survey (the basis for the unemployment rate), the number of unemployed zoomed by 434,000 after dropping by 284,000 the previous two months. It appears to have occurred largely because a lot more people (410,000) entered the labor force (i.e., started looking for work, and didn’t get it).
  • The Household Survey only shows a net loss of 24,000 jobs in the economy during the month.
  • The net increase in the number of unemployed during the first quarter was 150,000. The quarter-long number isn’t that large, but the one-month increase of 434,000 will likely be the one that will get media attention.
  • It implies more precision than might exist, but I’m going to calculate it anyway — Carried to three decimal points, the unemployment rate was 4.975% in December, 4.925% in January, 4.812% in February, and 5.085% in March.
  • African-American unemployment, which had dropped from 9.2% to 8.3% in February, went up to 9.0% in March; teen unemployment, which was 18.0% in January, went down for the second straight month, from 16.6% to 15.8%.
  • In the Establishment Survey (the basis for the number of jobs gained/lost in the economy) — Prior-month revisions — February’s -63,000 was revised to -76,000 (a -13,000 net change), while January’s -22,000 (after last month’s revision) was revised to -76,000 (a -54,000 net change).
  • So the number of estimated number of Americans working at the end of March was 147,000 fewer (-80-13-54) than it was thought to be at the end of February.

I may update for the expected Old Media pile-on later today.

_______________________________________

UPDATE: I understand seasonal adjustments and the importance of reporting on that basis, but sometimes things in the raw data jump out. Here’s an example from Table A-1 supporting today’s Employment Situation Report:

UnempTableA1_0308

So the real increase in the number of people working, according to the Household Survey, was 558,000 jobs.

Now before getting too excited, March 2007′s analogous number was an increase of 844,000, and March 2006′s was 776,000. But I’m still left thinking that this year’s raw increase indicates that the job difficulties of the past few months might have bottomed out.

I think March’s large raw increase in the number of people employed goes a long way towards explaining why the stock market, which is down only 0.15% about 15 minutes after the opening bell, has essentially shrugged off today’s employment report. It would be nice to think the politicians and Old Media might react similarly, but of course they won’t.

UPDATE 2: The raw data in Table B-1 of the Establishment Survey (the basis for reporting the number of jobs gained/lost) is even more stunning:

UnempTableB1_0308

There were 1.1 million more people who were actually working in March than there were in January.

As above, the two-month results in the two previous years were better (2007 — 1.65 million [1.58 after revisions]; 2006 — 1.81 million [1.91 after revisions]). But again, the still-big increase this year supports the idea that the bottom-out may have already happened.

Positivity: Torah Scroll Traveling Home From Raleigh to Czech Republic

Filed under: Positivity — Tom @ 6:00 am

From Raleigh, North Carolina (video, slide show, and other background is at the link):

Posted: Mar. 28, 2008
Updated: Mar. 29, 2008

A Torah scroll, the first five books of the Bible housed at a Raleigh temple, is being taken on a visit to its Czech home this weekend.

The piece of religious history, written on a 150-year-old parchment scroll, ended up at the Temple Beth Or synagogue in Raleigh during the 70s after being housed in a Prague synagogue until 1964 and then in London with thousands of scrolls rescued from Eastern Europe.

“It was sent over here (the West) with many ritual objects during the Holocaust when the Jews knew there was no hope of survival of the Jewish community in Eastern Europe,” said Rabbi Lucy Dinner of Temple Beth Or.

The Torah came from a synagogue in a village called Hermanuv-Mestec in what is now the Czech Republic.

“We consider it our sacred responsibility to care for the Torah, to use the Torah and to keep its word alive in the way that would be fitting of the Jews who died during the Holocaust,” Dinner said.

Dinner said her congregation always thought the Czech temple from which the scroll came had been destroyed, until Associate Rabbi Raachel Jurovics met a seminary student from the village.

“The synagogue was still standing – a miracle in itself it was still standing,” Dinner said.

Though only two Jews remained in Hermanuv-Mestec after the Holocaust, the village saved the synagogue. The locals even did a major restoration in 2001. …..

Go here for the rest of the story.