Friday, September 18, 2015

Good August jobs, but watch for later revisions

I would have written about this yesterday, but the Old Fashioned's annual $1 old fashioned day got in the way, along with this thing called work on Friday. But I wanted to talk about a couple of big jobs releases from yesterday that gave a picture of how things look in Wisconsin, and I'll note that the past history that one shows leads me to think the one for the more recent time period might be revised at a future date, and not to the upside.

The first release to discuss involves the August jobs numbers in Wisconsin. Overall this looks very good, and for once, the usually-absurd pro-Walker cheerleading from the Department of Workforce Development seems to be mostly warranted.
Place of work data: Wisconsin added 7,200 private-sector jobs from July 2015 to August 2015, and a statistically significant 47,800 private sector jobs and 47,600 total non-farm jobs from August 2014 to August 2015 (seasonally adjusted). Wisconsin also realized significant year-over-year gains of 7,200 jobs in manufacturing, 5,400 jobs in financial activities and 12,800 jobs in education and health services.

•Place of residence data: A preliminary seasonally adjusted unemployment rate of 4.5 percent in August 2015, down from 4.6 percent in July 2015. The 4.5 percent rate is below the national unemployment rate of 5.1 percent for the month and below the state's rate of 5.3 percent in August 2014. Additionally, the state's labor force participation rate of 67.4 percent in August outpaced the national rate of 62.6 percent.
Of course, contributing to that drop in the unemployment is yet another reduction in the state’s labor force (this time by 1,200), making for a total of 49,100 labor force dropouts since January. But that’s a rare spot of dimness in an otherwise strong August report, and I also should point out that July’s total was also revised up by 1,900 total jobs and 900 private sector jobs, making for back-to-back total job gains in the last two months of 21,300 total jobs, and 16,300 private sector jobs. Those are very good figures.

However, we’ve also seen really good Wisconsin jobs figures in the past turn out to be not so good upon further evidence. Let me direct you to the news release that came out with the March 2015 Wisconsin jobs report a few months ago.
Place of work data: The state added a statistically significant 53,200 total non-farm jobs and 48,200 private sector jobs from March 2014 to March 2015 (seasonally adjusted). Other statistically significant changes include a year-over-year gain of 8000 jobs in construction, 8,600 jobs in manufacturing, and 4,700 jobs in financial activities. Wisconsin's private-sector job totals remain above pre-recession levels.
Now let’s compare what was reported there with the QCEW figures that came out on Thursday for that same March 2014-March 2015 time period (more on that report in a later post). I grabbed these figures from the always-awesome QCEW interactive map site.

Statistics for March 2014-March 2015 period
Total jobs gained
DWD: 53,200
QCEW: 39,583 (-12,617, -23.7%)

Private-sector jobs
DWD: 48,200
QCEW: 39,624 (-8,536, -17.7%)

DWD: 8,000
QCEW: 6,021 (-1,979, -24.7%)

DWD: 8,600
QCEW: 6,265 (-2,335 -27.2%)

Financial Activities
DWD: 4,700
QCEW: 1,146 (-3,554, -75.6%)

So don’t be surprised if you see a similar “oops, we really didn’t gain that much” reality come forth in the coming months about these supposedly strong jobs figures that makes the seeming boom in Summer 2015 not such a big bang.

On the flip side, it’s possible that these “increases” in the monthly report are simply revisions to the mean, as the same place-of-work survey indicated the state lost jobs in 3 of the 4 months between February and June. So even with the good numbers of July and August, the state still has only added 24,200 private sector jobs in 2015 based on these surveys, which is barely more than 3,000 a month, or a yearly pace of around 36,500. That would be quite mediocre in a time of major job growth in the country as a whole, and basically the same levels that we saw in 2014, when Wisconsin finished 38th in the nation in private sector job growth. So maybe these numbers are legit. :P

In short, even though I have skepticism about the year-long figures, it seems that there have been a good couple months to lift the gloom of an awful first half of 2015 for Wisconsin’s economy. But it doesn’t reflect the changes in the classrooms as schools started in September, nor does it show how the tourist season ended, and I would think both of those statistics will show in reports that come out in the next month that give us an indication of what to expect as the weather cools and winter sets in.

PS- UW Professor Menzie Chinn goes over these August jobs numbers in more detail at Econbrowser if you want an added way to slice and dice the data, in particular the continued declines in the Wisconsin labor force.

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