The
Bureau of Labor Statistics‘ (
Observations
from the employment reports include:
*
There were numerous anomalies in the data. For example --
-
The number of people who found work (+1.199 million) were 2.5 times the number
of jobs created (+467,000).
- The seasonally adjusted jobs gain was +467,000 whereas the unadjusted data
showed a loss of 2.7 million jobs.
- To achieve the reported headline jobs gain, the BLS deployed the largest seasonal
adjustment ever for the month of January (+3.291 million).
- A significant proportion of the change in the number of employed persons
(+1.199 million) derives from estimates of changes in population. If one
controls for the population effect, the number of employed would have fallen by
272,000 rather than rising by 1.199 million.
*
As reported, goods-producing industries added just 4,000 jobs; service-providers:
+463,000. Employment growth continued in leisure and hospitality (+151,000), in
professional and business services (+86,000), in retail trade (+61,000), and in
transportation and warehousing (+54,200).
Manufacturing
added 13,000 jobs. That result is consistent with the change in the Institute for Supply Management’s (ISM) manufacturing employment sub-index, which expanded
more rapidly in January. Wood Products employment rose by 2,000 (ISM was
unchanged); Paper and Paper Products: +700 (ISM fell); Construction: -5,000
(ISM rose).
* The number of employment-age persons not in the labor force tumbled (-326,000) to 99.5 million; that is 4.5 million higher than in February 2020. With the labor force expanding, the employment-population ratio (EPR) edged up to 59.7%, another pandemic high; even so, the EPR is 1.5PP below the February 2020 level.
* Because the civilian labor force expanded by 1.393 million in January, the labor force participation rate rose to 62.2%. Average hourly earnings of all private employees increased by $0.23 (to $31.63), and the year-over-year increase accelerated to +5.7%. For all production and nonsupervisory employees (shown above), the tale was much the same: hourly wages rose by $0.17, to $26.92 (+6.9% YoY). Since the average workweek for all employees on private nonfarm payrolls fell by 0.2 hour, to 34.5 hours, average weekly earnings rose (+$1.66) to $1,091.24 (+6.2% YoY). With the consumer price index running at an annual rate of +7.0% in December, the average worker continues to lose purchasing power.
* Full-time jobs jumped (+973,000) to 131.2 million; with that increase, there are now 325,000 more full-time jobs than in February 2020. For perspective, however, the non-institutional working-age civilian population has risen by nearly 3.6 million during that period. Workers employed part time for economic reasons (shown in the graph above) -- e.g., slack work or business conditions, or could find only part-time work -- retreated by 212,000, along with those working part time for non-economic reasons (-117,000); multiple-job holders rose by 91,000.
For a “sanity test” of the job numbers, we consult
employment withholding taxes published by the U.S.
Treasury. Although “noisy” and highly
seasonal, the data show the amount withheld in January dropped by $77.9 billion,
to $273.2 billion (-22.2% MoM; +21.2% YoY). To reduce some of the monthly volatility
and determine broader trends, we average the most recent three months of data
and estimate a percentage change from the same months in the previous year; the
average of the three months ending January was 30.1% above the year-earlier
average. There has been disagreement in the past between the jobs and
withholding-tax reports, but this is the second month of truly eye-catching
disparities.
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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