January Jobs Report – Mind the Revisions

The January Jobs Report was released this past Friday. Most of the media was “caught off guard” by the solid January Jobs Report. The data behaved pretty much as this column had projected: Non-seasonally adjusted jobs, full-time and part-time, fell, non-seasonally adjusted workers fell, and unemployment rose. Seasonally adjusted, full-time and part-time jobs fell, unemployment rose, and both Private Sector Workers and Non-Farm Payroll  Workers increased in numbers.  The details are covered in “January Jobs Report: Shutdownproof Economy?“

There were Significant revisions to the Current Employment Statistics data. The “Shutdownproof Economy” article detailed how the  seasonally adjusted (SA) data from 1980 through 2018 were revised.The downward revisions to the 2017 data is a continuation from last January when the 2017 was revised lower and the 2015 and 2016 data were revised higher than reported during the December 2017 article.  It was a January Jobs Surprise. It was amazing that Former President Obama added workers to his economy two years after leaving office, seasonally adjusted.

The Seasonally Adjusted Data for all sectors  back through was revised back through 2014 for all sectors. This is significant. The non-seasonally adjusted data was revised from April 2017 through December 2018. The seasonally adjusted data was revised from January 2014 through December 2018.  Why would the SA CES data be revised back into 2014 while the NSA CES data was revised only back to April 2017? What happened during 2017 that didn’t happen during 2014, 2015, or 2016? Hint: It happened during November 2016. The SA CES data reveals that:

• Total 2014 Workers were revised up 15,000 and Private Sector was revised up 17,000
• Total 2015 workers were revised up 32,000, private sector up 30,000, net yearly revision up 17,000 and 13,000 respectively.
• Total 2016 workers were revised up 6,000 private sector up 8,000, net yearly revision was down 35,000 total and down 95,000 private sector.
• Total 2017 workers were revised down 29,000 and private sector was revised down 87,000. Remember 2017 was revised lower last year. This means the net year to year changes  were -35,000 and -95 respectively.
• Total 2018 was revised up 7,000 and down 86,000 for the private sector, net up 43,000 for total non-farm payroll and a mere +1,000 for the private sector.

Net- Net, both the SA and NSA data for Construction, IT, Financial Services, Education and Health Services (EHS,)  Leisure and Hospitality (LAH) and the Government Sector were revised higher than reported just this past December, and the Mining/Logging (M/L,) Manufacturing, TTU, Financial Services, Professional Business Services (PBS,) and Other Services (OS) Sectors were revised lower than their December Advance data reported.

What Difference does it Make? The December JOLTS data will be released next week on February 15th. People have conflated the job openings with the unemployment numbers and saying that more job openings than unemployed workers is a “big deal.”  The sectors with the most job openings are EHS, TTU, PBS, and LAH. TTU and PBS were revised lower while the EHS and LAH revised higher. Will these data points be revised within the next month or so?

Wages and Workers Rose January to January, Non-seasonally Adjusted. The month to month data dropped across all sectors non-seasonally adjusted, month to month. It’s called January. The Seasonally adjusted Worker data rose month to month for all sectors except IT and rose for all sectors January to January. Every sector saw wage increase January to January. The largest percentage wage growth were for IT, LAH, OS, EHS, and PBS.  IT jumped 7.56%. Hours worked were up for almost all sector. Net Net when the hourly rate jumped 3.15%, the hours worker 2.46% and the number of workers grew by 2.15% the combined effect was our earning power jumped 5.73%. This should be great news for the January Retail Sales data.

We are not quite back to the December 2007 levels for three sectors. Manufacturing, IT and Construction still have a way to go to return to their 2007 levels. Manufacturing had been on the decline for decades. Construction tailed off with the Housing Recession. IT peaked during 2001. These are three of the highest paying sectors. EHS and TTU are surging. These are two of the lowest paid sectors. More lower paid workers means a lower average weekly wage. More higher paid workers means that that impact is lessened by a little bit.

This was a remarkable jobs report. We have more workers working this January than last January, even with all of the revisions. The revisions benefited the SA worker numbers for 2014 and 2015 and punished the data for 2016, 2017, and 2018. The revisions punished the NSA CES data only for 2017 and 2018. Workers are growing in number January to January. Wages are growing January to January.

It’s the economy.