Friday, November 20, 2015

October jobs look great- but probably aren't real

On the surface, these jobs numbers for October look outstanding.
Wisconsin added a statistically significant 15,100 private-sector jobs and 16,100 total non-farm jobs from September 2015 to October 2015 (seasonally adjusted). The addition of 15,100 private-sector jobs over the month is the largest one-month gain since April 1992, based on publicly available data. The month of October also saw significant job gains of 2,500 in manufacturing, 1,400 in financial activities, 5,000 in professional and business services, and 3,900 in education and health services. Wisconsin's significant year-over-year gains include the addition 50,800 total non-farm jobs and 43,600 private-sector jobs, which also include 14,100 additional jobs in education and health services, 4,700 jobs in financial activities, and 2,500 jobs in information.

•Place of residence data: A preliminary seasonally adjusted unemployment rate of 4.3 percent in October 2015, unchanged from September 2015.The 4.3 percent rate is below the national unemployment rate of 5.0 percent for the month and below the state's rate of 5.3 percent in October 2014. The state's October rate is still the lowest for the month since April 2001, when the rate was 4.3 percent. Additionally, the state's labor force participation rate of 67.6 percent in October continues to outpace the national rate of 62.4 percent.
And in a rarity, the labor force rose in October, and the "steadiness" of the unemployment rate actually masks a drop from 4.34% to 4.26%. So apparently our state was booming last month. Who knew?

The reason you or I may not have known happy days were here again is because those reported numbers should come with a huge amount of caution. The first of which includes the huge downward revisions from September’s numbers that are in the same jobs report that’s trumpeting the major increase in October.

Revisions from September 2015 Wisc. Jobs report
Private sector
Revision -5,700
Revised Sept. total -7,000

Total jobs
Revision -7,400
Revised Sept. total -6,000

So if you put the last two months together, the totals become +8,100 in the private sector and 10,100 overall. That’s still pretty good, but not really different what would be expected in two months that added (445,000 jobs) nationwide.

In addition, Wisconsin’s October jobs numbers have been subject to wide changes in each of the last two years. Take a look at what was originally reported by the DWD, and then compare it to what happened with benchmark revisions done early the following year, when jobs figures are compared to the Quarterly Census on Employment and Wages and then adjusted.

October jobs change, Wisconsin 2013 + 2014
October 2013
Reported +12,400 private, +11,900 total
Revised +600 private, -1,000 total

October 2014
Reported +4,000 private, +100 total
Revised +11,100 private, +11,300 total

So let's hold onto our hats on that preliminary figure of more than 16,000 jobs being added for October in the state. It seems like that number will be modified in a few months.

Another bit of data in that monthly report that undermines the alleged increase in October jobs is the inclusion of preliminary numbers from the next QCEW, which will be released nationwide next month. This goes over the June 2014-June 2015 time period in the more refined “gold standard” jobs report, and it shows that things weren’t exactly peachy a few months ago. Those numbers say that 30,735 private sector jobs were added, which is only 1.27% growth, the worst growth in a quarter for Wisconsin since the end of 2013. Total jobs also declined, to just under 29,000 total jobs and 1.03% growth.

This year-over-year QCEW figure is about 3,000 less than what was reported by the Wisconsin DWD this Summer, and as UW Professor Menzie Chinn notes, this has been a common trend over the last couple of years in Fitzwalkerstan, which likely means that the jobs numbers will be revised down when the next benchmarking happens in early 2016.

But hey, maybe the DWD is right, and maybe we did just match the private sector job growth for the first nine months of 2015 with what we added in October, despite the continual reports of mass layoffs being announced by Wisconsin businesses (Johnson Controls in Milwaukee and the Tyson Chicken plant in Jefferson are the latest to make those announcements with nearly 700 layoffs between them). However, I’ll maintain a healthy skepticism about the DWD’s theory that “Happy Days are Here Again,” especially given the data-hiding that this Administration has been recently doing, and I’d recommend that you do the same.

1 comment:

  1. Mike Gousha using estimates on his UpFront program to say Wisconsin is now better than Minnesota is just like Scott Walker using estimates to mislead voters before the election. I will be watching the confirmed numbers to correct the record when they come out. #MediaFail