The BLS Reports Employment in the Second Quarter Fell By 287 Thousand – Mish Talk

BLS Business Employment Dynamics Summary by the BLSPlease consider the Business Employment Dynamics Summary for the second quarter of 2022. Key Points From March 2022 to June 2022, gross job gains from opening and expanding private-sector establishments were 8.3 million, a decrease of 185,000 jobs from the previous quarter. Private-sector establishments were 8.5 million, an increase of 1.6 million jobs from the previous quarter. The difference between the number of gross job gains and the number of gross job losses yielded a net employment loss of 287,000 jobs in the private sector during the second quarter of 2022. Gross Job Gains In the second quarter of 2022, gross job gains represented 6.4 percent of private-sector employment. Gross job gains are the sum of increases in employment due to expansions at existing establishments and the addition of new jobs at opening establishments. Gross job gains at expanding establishments totaled 6.6 million in the second quarter of 2022, a decrease of 335,000 jobs compared to the previous quarter.Opening establishments accounted for 1.7 million of the jobs gained in the second quarter of 2022, an increase of 150,000 jobs from the previous quarter. Gross Job Losses In the second quarter of 2022, gross job losses represented 6.7 percent of private-sector employment. Gross job losses are the result of contractions in employment at existing establishments and the loss of jobs at closing establishments. Contracting establishments lost 6.5 million jobs in the second quarter of 2022, an increase of 996,000 jobs from the prior quarter. In the second quarter of 2022, closing establishments lost 2.1 million jobs, an increase of 651,000 jobs from the previous quarter. This report matches what I have been saying for months. Noise vs Reality November 4: Is Full Time Employment a Trend or Noise? Despite the headline numbers, today’s job report was quite weak. December 2: Another Strong Jobs Report? Phooey, and I Can Prove It January 6: December Employment Rises by 717,000 All of Them Part TimePayrolls vs Employment Since March 2022 Nonfarm Payrolls: +2,887,000 Employment Level: +916,000 Full Time Employment: -288,000 444,000 since May! Mainstream media misses general miss the big picture captured in the above chart. This is not strong employment growth. Average Work Week Has Peaked and Total Aggregate Hours Is Rolling OverOn January 11, I noted Average Work Week Has Peaked and Total Aggregate Hours Is Rolling OverWhat Does the Demand for Temporary Help Suggest About a Recession?On January 24, I asked What Does the Demand for Temporary Help Suggest About a Recession? Three BLS Data Streams The BLS has three data streams on employment and jobs. Two reports are monthly. The third comes out quarterly. Establishment Survey: The establishment survey or Current Employment Statistics (CES) is the monthly jobs report that the Fed and nearly everyone else hangs their hats on. Household Survey: The household survey also comes out monthly. It is a phone survey in which the BLS asks if someone is working or not and if so, how many hours. The unemployment rate is from the Household survey. Curiously, people have a lot of faith in the unemployment rate, but no faith on employment numbers. The Quarterly Census of Employment and Wages (QCEW) comes out quarterly as the name suggests. QCEW vs CES Whereas the QCEW data cover more than 95 percent of all employers, the CES sample represents just 6 percent of the QCEW total. Let that sink in for one second. It shouldn’t take any longer. The lead chart of the Business Employment Dynamics Summary is based on QCEW data.Q2 QCEW Employment vs CES Jobs vs Household SurveyQCEW March-June: -287,000Household Survey Employment March-June: -271,000CES Establishment Survey March-June: +1,047,000 Guess what ? Scroll to Continue It seems the household data makes far more sense than the widely accepted establishment survey. And that is for Q2. The second half of the year, especially the fourth quarter certainly did not strengthen. The Philadelphia Fed Just Revised Jobs Lower by 1.2 Million for Q2 On December 16, I commented The Philadelphia Fed Just Revised Jobs Lower by 1.2 Million for Q2 net new jobs were added during the period rather than the 1,121,500 jobs estimated by the sum of the states; the US CES estimated net growth of 1,047,000 jobs for the period. Payroll jobs in the nation remained essentially flat from March through June 2022 after adjusting for QCEW data. The CES program relies on a monthly nationwide survey of about 131,000 businesses and government agencies representing about 670,000 establishments. These samples are used to estimate total employment not only of states and MSAs but also of industrial sectors within states and MSAs. In contrast to the CES sample of 670,000 establishments, the QCEW program reported employment counts for nearly 11 million establishments covered by state and federal unemployment insurance (UI) laws in the first quarter of 2021. The QCEW data for October, November, and December 2021 were released on June 8, 2022. That estimate was based on QCEW data. We now have the actual Q2 results. And here’s the kicker. Looking Ahead Our Early Benchmark process should note larger downward revisions in December 2022. Not until February 2024—with the incorporation of the March 2023 benchmarks—will the CES estimates offer a full accounting of US employment for the bulk of 2022. Unfortunately, our Early Benchmarks lag the moments when critical policy deliberations are made, but they do offer earlier confirmation of apparent shifts in recent payroll job trends. And pervasive, persistent, and deep downward revisions may presage the NBER’s declaration of a recession. Just NoiseNot to worry, it’s just noise. Retail Sales Month-Over-Month Advances and DeclinesFood Service: -0.9 percentFood Stores: +0.0 percentGas Stations: -4.6 PercentGeneral Merchandise: -0.8 PercentExcluding Motor Vehicles and Gas: -0.7 PercentExcluding Motor Vehicles: -1.1 PercentNonstore (Think Amazon): – 1.1 Percent Motor Vehicles: -1.2 Percent Department Stores: -6.6 Percent Real spending fell off the cliff starting November and accelerated in December. For discussion, please see What Do Real Income and Spending Suggest About Recession Timing? Signs Say Industrial Production Has Peaked and so a Recession is Imminent Recession lead times in months based on Fed data. Please note Signs Say Industrial Production Has Peaked and so a Recession is Imminent Are those noise too? Let’s see what Wonderland has to say. Alice Debates the Mad Hatter and the Red Queen on Timing the Recession Alice challenged the Mad Hatter, the Red Queen, and the March Hare to a debate on whether or not the economy was in a recession. The Mad Hatter, Red Queen, and March Hare all touted strong jobs as the reason there would be no recession. For discussion, please see Alice Debates the Mad Hatter and the Red Queen on Timing the Recession I also take a look at the inflationary aspects of climate change. If you haven’t read that article, please do. Meanwhile, please note the Fed is looking at jobs data that is grossly wrong and six months old to boot. This post originated at MishTalk. Com Please Subscribe! Like these reports? I hope so, and if you do, please Subscribe to MishTalk Email Alerts. Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time. If you have subscribed and do not get email alerts, please check your spam folder. Mish

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