JOHN WILLIAMS’ SHADOW GOVERNMENT STATISTICS

 COMMENTARY NUMBER 304
Census Jobs Loss, Home Sales

June 23, 2010

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Census Firings Cost June Payrolls Roughly 240,000 Jobs

May New Home Sales Down 40.5% in Month
After Major Downside Revisions to Earlier Reporting

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PLEASE NOTE: The next regular Commentary is scheduled for Friday, June 25th, following the release of the third estimate (second revision) of first-quarter 2010 GDP, and will include an assessment of the May new orders for durable goods due for release tomorrow (Thursday, June 24th).

– Best wishes to all, John Williams

 

Ongoing Activity Slows Anew, as Reported Economic "Recovery" Weakens in Revision, This morning’s (June 23rd) brief Commentary addresses the weaker-than-consensus homes sales reported yesterday and today, along with a first glance at hard data for part of the June payroll reporting, which is due for release on Friday, July 2nd. 

What appears to be happening in the sudden "unexpected" weakening of a number of business statistics is a combination of reporting catch-up and a re-intensification of the economic downturn. This area will be covered more deeply in a broader update of economic activity in this Friday’s upcoming Commentary No. 305.

Census Bureau Reports Firing of 243,000 Temporary Census Workers in June. Key to the significance of the upcoming reported change in June payrolls will be the change in payrolls net of the change in temporary census workers employed. The Census Bureau reported its weekly payroll of temporary workers, today, for the week including June 12th (inclusion of that day defines the Bureau of Labor Statistics’ [BLS] payroll survey period). The June number was 330,737 versus 573,779 in May, a drop of 243,042, which should be very close to the number reported by the BLS, say roughly 240,000.

Forget the private sector payroll change that will get the press headlines, the total payroll change net of census firings is the number to watch. It includes the private sector as well as other government payrolls, a sector that has been seeing downside pressure recently, particularly at the state and local levels.

I would look for an outright contraction of June payrolls, net of temporary census impact. Such would mean an aggregate monthly loss in excess of 250,000 jobs. The early consensus from Briefing.com is an aggregate loss of 70,000 jobs in June, versus May’s census-spiked gain of 431,000, with the June U.3 unemployment rate unchanged at 9.7%. I would be surprised if the consensus estimates do not turn more negative.

As to unemployment, an increase from both census catch-up and underlying economic weakness could push the U.3 unemployment rate to 10% or higher.

Looking ahead, there still are 330,737 temporary census hires who will lose their jobs in the next couple of months, depressing reported payroll change in July and August, etc.