Employment Games

May 16, 2023


Jay Powell likes to keep talking about that when he’s trying to explain that the economy isn’t headed for the big belly landing. Here’s what he said in his latest FOMC statement:

The labor market remains very tight. Over the first three months of the year, job gains averaged 345 thousand jobs per month. The unemployment rate remained very low in March, at 3.5 percent. Even so, there are some signs that supply and demand in the labor market are coming back into better balance. The labor force participation rate has moved up in recent months, particularly for individuals aged 25 to 54 years. Nominal wage growth has shown some signs of easing, and job vacancies have declined so far this year. But overall, labor demand still substantially exceeds the supply of available workers.

“Labor demand exceeds supply.” 

In other words there aren’t enough workers to fill the jobs available. And yet…

Once again we just experienced another unemployment miracle this month. The non-farm payrolls number for April beat expectations again.

The May print showed the economy adding 253,000 jobs (in April) while the consensus was only 180,000.

According to the chairman, the economy added 345,000 jobs per month during the first quarter — that’s over a million jobs added.

Makes you kind of wonder, where are all these new workers are coming from?

Mathe-magics to the Rescue!

I’ve written about employment math here, here, and here before.

This past Feb I explained to my paid subscribers how what should have been a massive drop in employment numbers turned into a 517,000 job gain through the magic of “seasonal adjustments” — roughly 3 million jobs were added.  

Even on a monthly basis, the number is far from a true indication…

First, you need to understand that no initial economic report is final. In the case of nonfarm payroll numbers, the BLS will continue to collect data for three months before “benchmarking” a number. So what you see today may be quite different in two months. (Of course by then, any revisions basically become irrelevant.)

So what’s this year really been like?

After the massive January report of 517K new jobs, February reported another 311K jobs added.


The change in total nonfarm payroll employment for December was revised down by 21,000, from +260,000 to +239,000, and the change for January was revised down by 13,000, from +517,000 to +504,000. With these revisions, employment gains in December and January combined were 34,000 lower than previously reported.

The March report indicated another 236,000 jobs added. But again…

The change in total nonfarm payroll employment for January was revised down by 32,000, from +504,000 to +472,000, and the change for February was revised up by 15,000, from +311,000 to +326,000. With these revisions, employment in January and February combined is 17,000 lower than previously reported.

Which brings us to the April gain of 253,000. That report was accompanied by…

The change in total nonfarm payroll employment for February was revised down by 78,000, from +326,000 to +248,000, and the change for March was revised down by 71,000, from +236,000 to +165,000. With these revisions, employment in February and March combined is 149,000 lower than previously reported.

What’s the Moral of This Story?

In recent history, it would appear that every time an employment number beats estimates, there are downward revisions that barely get noticed by the market. 

Add to all that the seasonal adjustments the folks in the economics departments throw in and it’s close to impossible to get any kind of accurate picture from an employment perspective. 

And that should be telling you something itself…

Make the trend your friend,

Bob Byrne
Editor, Streetlight Daily