Wednesday, August 06, 2014

Payroll Employment and Seasonal Factors

by Bill McBride on 8/06/2014 05:31:00 PM

This might be a good time to review the seasonal pattern for employment.

Even in the best of years there are a significant number of jobs lost in the months of January and July. In 1994, when the economy added almost 3.9 million jobs, there were 2.25 million lost in January 1994, and almost 1 million payroll jobs lost in July of that year.

This year, in July 2014, 1.11 million total jobs were lost (not seasonally adjusted, NSA), however all of the decline in non-farm payrolls NSA was from the public sector (teacher layoffs). Usually those teachers return to the payrolls in September and early October. Since this happens every year, the BLS applies a seasonal adjustment before reporting the headline number.   

For the private sector, there are always a number of jobs lost in January (retailers and others cutting jobs) and in September (summer hires let go).

Payroll Jobs monthly NSA Click on graph for larger image.

This graph shows the seasonal pattern for the last decade for both total nonfarm jobs and private sector only payroll jobs. Notice the large spike down every January.

In July, the private sector added 127 thousand jobs (NSA).  This was the strongest July since 1999.

The key point is this is a series that NEEDS a seasonal adjustment!

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