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285 K jobs lost in May [View All]

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unlawflcombatnt Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jun-07-08 03:50 AM
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285 K jobs lost in May
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June 6, 2008

Friday's Employment Report is another testament to government science fiction writers' creative talents. Nonfarm Payroll Employment fell "only" -49,000. But this number was highly manipulated, and greatly understates true job losses.

Let's start with the "Household Survey" ( which is NonFarm Payroll Employment, which comes from the "Establishment Survey").

A total of 285,000 jobs were lost in May, falling from April's 146.331 million down to 146.046 million for May.

Unemployment rose from 5.0% to 5.5%

The number of those unemployed increased by a whopping 861,000 in May, from April's 7.626 million up to 8.487 million in May. (This is an addition of 861,000 workers to the unused labor supply, putting even more downward pressure on wages.)

There are now 87 million working age Americans who are NOT employed.
(This is the sum of those Unemployed + "Not-in-labor-force").

Now let's go to the Establishment Survey, which creates the numbers for Nonfarm Payroll Employment.

Nonfarm Payroll Employment declined "only" -49,000. This number, however, was manipulated upward by the BLS's favorite tool the business "birth/death" model. This concoction added 217,000 jobs to the total. ( The "birth/death" addition is based on an imaginary number of jobs created that are not counted, unlike the bulk of the Payroll Employment number, which is based on actual, countable jobs. The birth/death model is like a "mark-to-model" addition to the employment number.)

What this really means is, that Payroll Employment would have declined -266,000, were it not for the fictitious addition of jobs from the Birth/Death guesstimate. Below is a copy of the BLS's Birth/Death estimate, showing the addition.



This model can also be found at the following link:
http://stats.bls.gov/web/cesbd.htm

The Payroll Employment breakdown showed a decline of -34K jobs in Construction and -26K in Manufacturing. Service sector jobs increased +8K. (The individual breakdowns can best be seen at Briefing.com )

Below is a bar graph from Briefing.com showing the month-to-month losses in Payroll Employment:



This is the 5th straight month of Payroll Employment job losses. The lion's share of job losses have come from Construction and Manufacturing. And without the addition of virtual jobs to both Construction and Manufacturing, those job losses would be much larger. Expect these job losses to be revised upward, once the BLS is forced to replace the fictitious birth/death additions with the actual countable numbers.

This is also at least the 5th month of the Recession as well, though it may have started even sooner.
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