Friday, August 06, 2010

Employment Report: Why the different payroll numbers?

by Calculated Risk on 8/06/2010 12:00:00 PM

Technical Update: A few readers have asked if I'm mixing SA and NSA data. Usually that is not appropriate, but I checked with the BLS, and in this special situation it is correct. I even submitted it as a question when the BLS had their first live chat back in March:

9:34 Michele Walker (BLS-CES) -
Submitted via email from Bill: Hi. The headline payroll number is seasonally adjusted, and the hiring for the 2010 Census is NSA. How would you suggest adjusting for the 2010 Census hiring to determine the underlying trend (not counting the snow storms!)?

Thanks for your question Bill.

There is an adjustment made for the 2010 Census. Before seasonally adjusting the estimates, BLS makes a special modification so that the Census workers do not influence the calculation of the seasonal factors. Specifically, BLS subtracts the Census workers from the not-seasonally adjusted estimates before running seasonal adjustment using X-12. After the estimates have been seasonally adjusted, BLS adds the Census workers to the seasonally adjusted totals. Therefore, to determine the underlying trend of the total nonfarm (TNF) employment estimates (minus the Census workers), simply subtract the Census employment from the seasonally adjusted TNF estimate.
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Original Post:

Once again there is some confusion about which payroll number to report.

Basically the media is confusing people. I explained this last month: Employment Report: Which payroll number to use?

The headline payroll number for July was minus 131,000.

The number of temporary decennial Census jobs lost was 143,000.

To be consistent with previous employment reports (and remove the decennial Census), the headline number should be reported as 12,000 ex-Census. That is consistent with non-Census reports.

Instead most media reports have been using the private hiring number of 71,000 apparently because of the complicated math (subtracting -143,000 from -131,000). Private hiring is important too, but leaves out changes in government payroll and is not consistent.

I've posted all the numbers, but I've led with the headline number ex-Census - and that is especially important now since state and local governments are under pressure.

Note: early this year I announced my intention to lead with the headline number ex-Census during the period of significant decennial Census employment changes. I thought everyone would lead it this way ... oh well ... at least the decennial Census will be over soon.

Earlier employment posts today:
  • July Employment Report: 12K Jobs ex-Census, 9.5% Unemployment Rate for graphs of unemployment rate and a comparison to previous recessions.
  • Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks