The jobs report for the month of May was quite depressing. This report came out right after I predicted we would see on average more than twice what the May report indicated. Thankfully, my prediction was for the next few months, not the last one. But the trend has been noticeable for a few months now. Instead of accelerating, job growth is slowing.
The reports with headlines like “69,000 Jobs Created” report what are called “seasonally adjusted” numbers. What that aims to do is smooth out the months that normally see intense increases or decreases in jobs numbers. This provides for a more stabilized report that can be compared month to month. For example, here are two recent months with their seasonally adjusted job gains:
- December 2011: 223,000
- January 2012: 275,000
Those numbers look like real solid gains. But if you report the actual gains they look a lot different:
- December 2011: -207,000
- January 2012: -2,668,000
Yes, that’s negative. So in the seasonally adjusted numbers it looks like we gained jobs. But the actual numbers show HUGE losses. Why? Because we typically lose jobs that time of year. Seasonal workers leave their employment that time every year. Unsurprisingly, there’s seasonal hiring in the spring months for summer time as well so the actual numbers are higher than the seasonally adjusted ones reported. One could assume it sounds like a sham, but the estimation process is pretty consistent. In 2011 we actually averaged 148k new jobs per month. But using the adjustment model to smooth out the months that averages to 153k. That difference is largely insignificant. But not completely.
The good news is that while the seasonally adjusted numbers for the first five months of 2012 were less than the first five of 2011, that is not the case for 2012 non-adjusted numbers. That means we’re actually gaining more jobs that we did last year.
What the future holds for job growth is difficult to predict. And no matter what way you look at the numbers, the trend does not look great. Hopefully things like lower gas prices and political spending, along with a budding housing recovery will help get things moving again. And hopefully whatever happens in Europe doesn’t spill over across the pond. We need 125,000 jobs per month just to keep up with the population (depending on who you ask). And reported jobs can be part time jobs so we still have a long ways to go to get to recovery.