Summary
Earlier this morning, the Labor Department released November employment data. The report indicated that the unemployment rate was unchanged, remaining at October's 5.0%. Also reported was a 215,000 expansion in payroll jobs during the month. However, as is the case virtually every month, today's report raises new questions about just how the Labor Department comes up with these numbers!
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* Today's release from the Labor Department indicated that the unemployment rate in November held steady at 5.0%. The report also showed an increase of 215,000 payroll jobs during the month.
* Regarding Hurricane Katrina and the November payroll survey, the Labor Department reported the following in today's release:
"For the establishment [payroll] survey, BLS resumed normal estimation procedures in November. The procedures had been modified in September and October to account for low response rates in Katrina-affected areas. In November, the number and type of responses from the Katrina-affected areas were deemed acceptable for a return to standard procedures."
Within the context of the above statement, you will definitely want to read the material I've excerpted from John Williams' latest newsletter. It appears later in this missive.
* The consensus forecast of today's report looked for an unemployment rate of 5.0%, versus the 5.0% that was reported. The consensus prediction of the gain in payroll jobs was around 210,000, quite close to the actual number reported.
* The two components comprising each month's employment report are the household survey and the payroll survey. The unemployment rate is derived from the former, making it a visible, highly sensitive number for political purposes.
* The payroll survey represents the number generally more important to the immediate behavior of the financial markets, although it also possesses a good deal of political importance. Today's report indicated job growth of 215,000 during November. This compared with a gain of 132,000 in payroll employment during November of last year.
* Today's report contained net revisions that added 13,000 to September and October payroll job creation. September went to +17,000 from minus 8,000, while October went to +44,000 from +56,000. Thus, including revisions, payroll employment over the last three months grew by 276,000 jobs, versus the 263,000 gain before the September and October adjustments. (During the same three-month period in 2004, payroll employment rose by 544,000.)
The following table breaks out the reported growth in payroll employment over the trailing three months, versus the same period in each of the prior five years.
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TRAILING THREE-MONTH PAYROLL EMPLOY-
MENT GROWTH (Thousands of Workers)
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Month 2005 2004 2003 2002 2001 2000
-----------------------------------------
Nov. 215 132 96 6 -293 216
Oct. 44 282 123 59 -377 -12
Sep. 17 130 94 -45 -254 118
---------------------------------
Total 276 544 313 20 -924 322
=== === === === === ===
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* For the 12 months ended November 2005, payroll employment expanded by a reported 1.995 million jobs. This compared with an increase of 2.122 million during the 12-month period ended November 2004. Over the six-month periods ended November 2005 and 2004, reported growth was 0.876 million and 0.921 million, respectively.
* According to today's report, average hourly earnings rose three cents during November, or by almost 0.2%, to $16.32. This compared with October's $16.29. The October figure was revised up by two cents from last month's report,
* Year over year, average hourly earnings rose 3.2%. This compares with a Consumer Price Index that rose 4.3% for the 12 months ended October (the latest CPI data currently available).
* During the 12 months ended October, the year-over-year gain in the CPI exceeded the year-over-year growth in average hourly earnings in all but one of those months (June 2005), exhibiting the longer-run loss of real purchasing power based on these particular series.
* The table at the end of the text contains the latest available results for key employment and inflation series. (NOTE: The new material contained in these tables will be posted to the "Data & Charts" section on the GRA website.)
Gillespie, Re: Williams/"Shadow Government Statistics"
The Labor Department has charge over the most important data series -- employment and inflation -- with regard to their influence over the financial markets. Yet, in most respects, government employment and inflation data are the most difficult to reconcile vis a vis "real-world" observations, and often, vis a vis similar data coming from private sector sources. In fact, government employment and inflation data frequently are difficult to reconcile against other government data!
As an example, particularly within the context of today's employment report, following is an excerpt from John Williams' latest "Shadow Government Statistics" newsletter, published on 11/21:
"The alternate employment measure of official nonfarm payrolls by state (see April 2005 SGS "Reporting Focus"), published by the BLS, shows that aggregate seasonally adjusted payrolls fell by 279,000 in September. The numbers included payroll declines in Louisiana, Mississippi and Alabama of 251,000, 60,000 and 5,000, respectively. That means that net of perhaps 316,000 jobs lost to Hurricane Katrina, the rest of the economy only created 37,000 new jobs in September, per this little-followed report.
"What was reported in the officially cleansed versions? Despite market expectations of a 150,000 to 200,000 drop in seasonally-adjusted September 2005 payroll employment, the monthly jobs loss was reported initially at just 35,000, or 244,000 shy of the decline seen when the same numbers were totaled on a state-by-state basis.
"Of course, the first official reporting was released on October 7th, but the state-by-state breakout was not published until October 21st. Hence, the more dire numbers reflected later and better information, perhaps? Not a chance! The October employment report, which followed on November 4th, showed that September payrolls declined by only 8,000, in revision! Neither the official September nor the October national payroll or household surveys gave any detail on Katrina impact. The official data are as though the storm never took place."
NOTE: If you are not currently a subscriber to "SGS" and would like more information about the newsletter, please go to "Shadow Stats", or contact me at gsrdr@aol.com.
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KEY U.S. EMPLOYMENT AND INFLATION DATA
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PAYROLL
UNEMPLOYMENT EMPLOYMENT AVERAGE HOURLY
RATE CHANGE EARNINGS
(%) (000s) ($s)
--------------- ---------- -----------------
Month Yr. Yr. Yr. Year/
/Year No. Ago No. Ago No. Ago Year
--------------- ---------- ------------------
11/05 5.0 5.4 215 132 16.32 15.82 3.2%
10/05 5.0 5.5 44 282 16.29 15.81 3.0%
09/05 5.1 5.4 17 130 16.19 15.77 2.7%
08/05 4.9 5.4 148 188 16.17 15.74 2.7%
07/05 5.0 5.5 277 83 16.14 15.70 2.8%
06/05 5.0 5.6 175 106 16.07 15.64 2.7%
05/05 5.1 5.6 126 250 16.03 15.62 2.6%
04/05 5.2 5.5 292 337 16.00 15.58 2.7%
03/05 5.2 5.7 122 320 15.95 15.54 2.6%
02/05 5.4 5.6 300 94 15.91 15.51 2.6%
01/05 5.2 5.7 124 117 15.90 15.48 2.7%
=================================================
12/04 5.4 5.7 155 83 15.85 15.45 2.6%
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EMPLOY. COST INDEX (%)* PRODUCTIVITY (%)#
----------------------- ------------------------
Year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Yr.
----------------------- ------------------------
2005 0.7 0.7 0.8 - 3.2 2.1 4.1 - -
2004 1.1 0.9 0.9 0.8 2.1 4.5 1.3 2.5 3.4
2003 1.2 0.9 1.0 0.8 3.1 6.6 9.6 0.8 3.8
2002 0.8 1.0 0.8 0.9 6.5 0.8 4.1 0.2 4.0
2001 1.1 1.0 1.0 1.0 -0.4 5.6 1.5 6.5 2.5
2000 1.2 1.0 0.9 0.9 -2.0 7.2 -0.9 4.0 2.7
1999 0.4 1.1 0.9 1.1 3.6 0.5 2.8 7.1 2.8
1998 0.7 0.8 1.0 0.7 3.2 1.2 4.5 2.1 2.8
1997 0.7 0.8 0.8 1.0 -1.2 5.0 3.4 1.6 1.6
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CONSUMER PRICE INDEX## PRODUCER PRICE INDEX@
-------------------------- ---------------------
Month Yr. Year/ Yr. Year/
/Year Index Ago Year Index Ago Year
-------------------------- --------------------
10/05 198.9 190.7 4.3% 160.0 151.1 5.9%
09/05 198.5 189.6 4.7% 158.9 148.9 6.7%
08/05 196.1 189.3 3.6% 156.0 148.5 5.1%
07/05 195.1 189.2 3.1% 155.1 148.3 4.6%
06/05 194.1 189.3 2.5% 153.7 148.2 3.6%
05/05 194.1 188.8 2.8% 153.7 148.3 3.6%
04/05 194.2 187.7 3.5% 154.4 147.7 4.7%
03/05 193.2 187.3 3.2% 153.7 146.4 5.0%
02/05 192.0 186.5 2.9% 152.5 145.6 4.7%
01/05 191.3 185.9 2.9% 151.9 145.7 4.3%
=================================================
12/04 191.2 185.0 3.4% 151.7 145.3 4.4%
11/04 191.2 184.6 3.6% 152.1 144.6 5.2%
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NOTE: All data are seasonally adjusted. *Total
civilian compensation, 3-month change. #Nonfarm
business output per hour, annual rates. ##All
urban, all items. @Finished goods.
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