• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Markets

Jobs Data 2: What Do the Numbers Mean?

Did we gain 151,000 jobs in January or lose 3 million?
By JIM COLLINS
Mar 03, 2016 | 03:00 PM EST
Stocks quotes in this article: AMZN, UPS

Following on from my column last Friday on the methodology behind the Bureau of Labor Statistics' Monthly Employment Report -- and just in time for February's report, which comes out tomorrow at 8:30 a.m. ET -- let's look at the numbers, themselves. 

As I mentioned in my previous column, the employment report is actually composed of two surveys: the establishment survey (CES), and the household survey (CPS). Therefore, it may be unrealistic to expect the two surveys to agree. 

But it really shouldn't be. If employers (surveyed in CES) are hiring more workers (surveyed in CPS) the numbers should converge. Each job filled should match each job taken. But the numbers don't always show that, and for a numbers geek like myself, that is frustrating, to say the least. 

Let's look at the most recent data from January, which was reported Feb. 5. 

The most widely quoted figure is the "jobs number," the month-on-month change in nonfarm payrolls from the CES. That figure, as you no doubt read, was 151,000 for January. It is seasonally adjusted, as are most government data. 

On a non-seasonally adjusted basis, the number of people employed in nonfarm jobs fell by nearly 3 million (2,989,000 to be exact) from December to January and registered 141.1 million as opposed to the seasonally-adjusted figure of 143.3 million. 

 So did we lose 3 million jobs or gain 151,000? And what about the 2.2 million jobs that exist in the seasonally-adjusted world but not in the as-reported world?

Well, the difference is driven by the holidays and the seasonal demand for labor. That's because everyone's Christmas shopping involves piling into Dad's Oldsmobile Six next to an annoying, heavily-bundled little brother and heading to the big department store downtown. Actually that's A Christmas Story, and the movie was set in the 1940s. Things are different now, thankfully. 

Companies like Amazon (AMZN) hire seasonal employees, and UPS (UPS) hires employees to keep up with Amazon, but the reason Amazon is a $270 billion market-cap company is that clicks are much less labor-intensive than bricks. 

So, I'm highly skeptical of those adjusted numbers, and if you want to read more on that topic hop on to Google and check out the excellent work former OMB Director David Stockman has done on the BLS' seasonal adjustments. He's not a big fan, either. 

The household survey is even more frustrating. The metrics are basically top-down. The BLS surveys a ridiculously small sample -- see my prior column for the numbers -- and from that determines:

  • Total Population
  • Eligible Civilian Labor Force
  • Total Employed 
  • Unemployed
  • Not in Labor Force

The math is simple. Labor force over population gives the participation rate; total employed over population gives the employment to population ratio; and unemployed over labor force gives the oft-quoted unemployment rate. 

But these numbers suffer from the same strong seasonal biases (and large future-month revisions) as the employment survey. In January the not-seasonally-adjusted employed population was 149.0 million, down from 149.7 million. On a seasonally-adjusted basis however, the number of employed grew by 515,000 to 150.5 million. 

So, what is the total number of employed persons in this country? The two surveys' key numbers differ by about 8 million people. That's kind of an important amount, and I don't think that farm workers make up all the difference. 

The upshot is that because fewer people are in the labor force, the percentage of unemployed has a natural downward bias - and the unemployment rate of 4.9% is totally meaningless. 

In contrast, as of January, 95.1 million people were reported as "Not in the Labor force" as per CPS data. That's 37.7% of the population and that figure is much higher than it was 10 or 20 years ago. What are those people doing? Are they all driving Uber cars and working as social media consultants?

I have no idea, but I care much more about that 95 million than the approximately 8 million who show up as "unemployed." The results from Super Tuesday indicate to me that those "unaccounted for" 95 million are unhappy at best, and, in many cases, just plain pissed off. 

Forget the CES/CPS alphabet soup and pay attention to the forgotten folks. They are making themselves heard. 

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Collins had no positions in the stocks mentioned.

TAGS: Markets

More from Markets

There Are Interesting Things Happening Beneath the Surface of This Market

James "Rev Shark" DePorre
Aug 8, 2022 4:32 PM EDT

Look for more positioning on Tuesday ahead of two important economic reports.

Weariness Sets in During This Bear Market Phase

Bob Lang
Aug 8, 2022 1:00 PM EDT

Sentiment is starting to turn bullish, but painted with a skeptical eye as the wall of worry is up high.

The Market's Strength Gains More Traction

James "Rev Shark" DePorre
Aug 8, 2022 10:50 AM EDT

While there are plenty of serious arguments that justify this strength, the primary reason that it's so strong is mainly due to positioning.

On the Road to Recovery

Guy Ortmann
Aug 8, 2022 10:45 AM EDT

While a near-term pause may be in the cards, improvements in trend and breadth are encouraging.

Hong Kong Cuts Quarantine to 3 Hotel-Stay Days

Alex Frew McMillan
Aug 8, 2022 8:15 AM EDT

With its economy in recession, Hong Kong is finally recognizing that it must 'live with Covid' like the rest of the world.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:24 AM EDT PETER TCHIR

    Jobs Report Reaction: Incredibly Strong, But Questions to Ask

    An incredibly strong July jobs report. Not only d...
  • 08:54 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The Secret to Dealing With FOMO
  • 03:51 PM EDT REAL MONEY

    AMD Second-Quarter Earnings Live Blog

    Real Money's Eric Jhonsa covers 's second-quarte...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login