by Bill McBride on 8/06/2015 03:10:00 PM
Thursday, August 06, 2015
The seasonal adjustment for July is a little tricky, so 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 Not Seasonally Adjusted (NSA), and almost 1 million payroll jobs lost in July of that year (NSA).
Last year, in July 2014, 1.11 million total jobs were lost (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.
Although there were 1.11 million jobs lost in July 2014 (NSA), after the seasonal adjustment, the BLS reported 209 thousand non-farm jobs were added (SA) .
For the private sector, there are always a large number of jobs lost in January (retailers and others cutting jobs) and some jobs lost in September (summer hires let go).
Click on graph for larger image.
This graph shows the seasonal pattern since 2002 for both total non-farm jobs and private sector only payroll jobs. Notice the large spike down every January.
Also notice the second large spike down every July for public sector jobs (teachers).
In July 2014, there are about 1.3 million teacher jobs lost (NSA), and that was seasonally adjusted to a 5 thousand job gain. This will be something to check in the jobs report tomorrow.
The key point is this series needs a seasonal adjustment, but the adjustment can be tricky.