2017 job figures start strong, so will Trump/GOP mess it up?

Friday featured the release of the last jobs report of the Obama presidency, and the starting point for the Trump Administration, and Trump has walked into a very good situation. 227,000 jobs were added for January 2017 on a seasonally-adjusted basis, and 235,000 in the private sector. That's a nice start to the year and an uptick in growth compared to the relatively tepid last few momnths. Even the slight rise in the unemployment rate (from 4.72% to 4.78%) was due to a large increase in people looking for work – work that a lot of those people found.

After accounting for the annual adjustments to the population controls, the civilian labor forceincreased by 584,000 in January, and the labor force participation rate rose by 0.2 percentage point to 62.9 percent. Total employment, as measured by the household survey, was up by 457,000 over the month, and the employment-population ratio edged up to 59.9 percent.

Naturally, the Trump Administration tried to take credit for the strong January report, except that there’s one big hole in that thinking.

The problem, however, is that Trump can’t exactly take total credit for the January jobs report. Trump, who said his focus is to create and bring back American jobs, took office on January 20th. The jobs figures, however, were based on household and establishment surveys conducted while Obama was still in office.

“For both surveys, the data for a given month relate to a particular week or pay period. In the household survey, the reference period is generally the calendar week that contains the 12th day of the month. In the establishment survey, the reference period is the pay period including the 12th, which may or may not correspond directly to the calendar week,” the Bureau of Labor Statistics site says.

And that survey was conducted before all of Bannon’s Trump’s foolish/regressive executive orders and diplomacy blunders, back when some economists were still believing that some of Trump’s racism and idiocy was just “campaign talk.” As noted by the drop in consumer confidence in the later part of this month, it seems some people are waking up to the fact that, if anything, TrumpWorld might end up making things worse than we feared.

But that’s in the future- what’s also interesting in the January report is that it includes the annual benchmark revisions for the year. The BLS explains how these revisions are arrived at.

In accordance with annual practice, the establishment survey data released today have been benchmarked to reflect comprehensive counts of payroll jobs for March 2016. These counts are derived principally from the Quarterly Census of Employment and Wages (QCEW), which counts jobs covered by the Unemployment Insurance (UI) tax system. The benchmark process results in revisions to not seasonally adjusted data from April 2015 forward. Seasonally adjusted data from January 2012 forward are subject to revision. In addition, data for some series prior to 2012, both seasonally adjusted and unadjusted, incorporate other revisions.

The total nonfarm employment level for March 2016 was revised downward by 60,000 (-81,000 on a not seasonally adjusted basis, or -0.1 percent). On a not seasonally adjusted basis, the absolute average benchmark revision over the past 10 years is 0.3 percent.

The effect of these revisions on the underlying trend in nonfarm payroll employment was minor. For example, the over-the-year change in total nonfarm employment for 2016 was revised from 2,157,000 to 2,242,000(seasonally adjusted). Table A presents revised total nonfarm employment data on a seasonally adjusted basis from January to December 2016.

This is intriguing in that we actually had job growth from 2012-2015 revised down slightly, particularly 2015, which meant that January 2016 is now listed with 109,000 fewer jobs than before. But 2016 ended up being better than we originally knew (up by 85,000). In fact, every month from February and September was either unchanged or revised up, with over 1 million total jobs being added between May and September alone.

On the flip side, the October-December months had a net revision of -50,000 jobs, meaning that those months had an average gain of less than 150,000 jobs a month – not bad, but not the 200,000 jobs a month gain that we averaged in the first 9 months of 2016.

And when you dig inside of January’s payroll numbers, we should temper our optimism, because three of the largest gaining sectors reflect lower-than-normal seasonal layoffs, which could be nothing more than a natural reaction to slower hiring/layoffs in those sectors in the months before.

Seasonal vs non-seasonal change, Jan 2017
Construction
Seasonally adjusted +36,000
Non-seasonally adjusted -248,000

Retail Trade
Seasonally adjusted +45,900
Non-seasonally adjusted -546,300

Food services and drinking places
Seasonally adjusted +29,900
Non-seasonally adjusted -245,000

So with the benchmark revisions and the January report, we see more confirmation that we are still in a moderate, relatively steady amount of growth. But that growth isn't accelerating, and we'll see what happens as the weather warms and people actually have to be hired and given raises. Combine that with the instability in the White House, and the nearly 7-year winning streak in the jobs figures is something that can't be taken for granted in 2017.