This morning the Bureau of Labor Statistics released one of the weirdest unemployment reports you’ll ever see. As reported by the BLS, non-farm payrolls fell by 20,000 jobs. Yet, unemployment fell dramatically, from 10.0 to 9.7%. With the labor force growing by nearly 150,000 per month, a loss of 20,000 jobs should have driven the unemployment rate up by 0.1%.
And that’s not even the weird part. What’s weird is that, while the non-farm payrolls fell by 20,000, total employment grew by 541,000. That means that farm employment exploded. In January?!?!? Hardly seems plausible. Making it even more unlikely is that weekly jobless claims continued to run at a high level throughout Janaury, a rate that should have unemployment rising by 0.5% for the month. Then, if that wasn’t weird enough, they cut non-farm payrolls by approximately one million going back to March of 2009. Did they discover that the Bush administration had been padding the figures? Or are they setting the stage to make any rebound in jobs look that much bigger?
The reason that the unemployment figure came in so much lower than everyone expected, I believe, is because the data is seasonally adjusted. January is typically a month when retailers lay off a lot of seasonal employees. So if, in a month when payrolls typically decline by 500,000, they only decline by 250,000 (because they never hired as many seasonal workers in the first place), then seasonally adjusted that’s a gain in employment of 250,000. I can’t prove it, because the BLS doesn’t make the unadjusted data available.
No one, including the Obama administration, really believes this month’s report. Obama’s proposed budget for next year, based on optimistic projections for the economy, only projected unemployment falling to 9.8% by the end of the year. Now it’s already at 9.7%? Not likely.
The following is my calculation of unemployment which, since it uses the same government data (what else can I use?), also shows similar declines in unemployment.
And here’s the same data in graphical format:
We’ll get a better read on the employment situation next month when the seasonal factors aren’t such an issue.