July jobs thoughts

Big news on Friday was the release of the July jobs report, which the media portrayed as a mixed bag, since it was an addition of 163,000 jobs (good, particularly given the weakness in recent reports), but also an increase in the unemployment rate to 8.3% (more on this in a second). Revisions to previous months weren't very different (a few more jobs in May, few less in June), so what do I draw out of this?

First of all, it matches my theory that this remains a slow-but-steady recovery, as private sector jobs are now up by more than 4.5 million in the last 30 months, and above zero when compared to when Obama took office in January 2009 (remarkable given that it was -3.3 million this time 3 years ago, and still falling). Even with GOP sabotage driving down the number of government jobs, total jobs are also back near zero since January of '09. In both measures, this puts Obama ahead of George W. Bush's record for first-term job performance.

A few other things that jump out at me is the seasonal adjustment factor to these numbers. As mentioned previously, I think seasonal adjustments are too big in these reports, as there are fewer "seasonal-only" jobs out there compared to past times, and a more steady amount month-to-month. This drove down the U.S. job numbers for 2nd quarter, but it also drove up the July numbers. Check out the contrasts.

Seasonal vs. non-seasonal job changes, April-July 2012
April- +68,000 seas.= +864,000 non-seas.
May- +87,000 seas. = +768,000 non-seas.
June- +64,000 seas. = +349,000 non-seas.
July- +163,000 seas. = -1,204,000 non-seas.

TOTAL CHANGE= +385,000 seas. = +777,000 non-seas.

This also presents a danger to Obama's job performance number, as August and September act like April, May and June, where the seasonal numbers are smaller than the non-seasonal ones (August's deflator is small, September's is bigger). Especially given school hiring cutbacks, this could be something to watch going forward.

The other interesting note is the unemployment rate. If you do the math on the number, it comes out to 8.25%, which gets rounded up to 8.3%. If it's 0.01% lower, it gets reported at 8.2%, and you can bet lots of media don't say much about it, even though it was still up over June;s 8.22%. Also means there as much that needs to be done to get that rate back down to 8.2% or 8.1% for August.

In addition, the unemployment survey goes the opposite of the payrolls survey, and expects as increase in the number of jobs and workers out there in July.

unemployment survey- July 2012
Labor force- -150,000 seas. = +141,000 non-seas.
"Employed"- -195,000 seas. = -76,000 non-seas.
"Unemployed"- +45,000 seas. = +216,000 non-seas.

Now if the payrolls deflator was used here, it would be expected that the number of those working would go down, but instead, the household/ unemployment survey indicates that employment and labor force should go UP for July. So that strikes me as inconsistent. Interestingly, the non-seasonal "employed" number is up 2.8 million year-over-year, which is above the payrolls number of 1.8 million.

So that's what I read out of this report- generally a mixed decision with a nice seasonally-helped bounceback in employment. Between this and strong retail sales numbers and slightly improved consumer confidence numbers I'd say we're still on a decent growth track for the start of the 3rd Quarter. Much to the dismay of Mitt Romney and the Baggers whose main hope is a bad economy to blame on Obama.