The bureau of labor statistics (BLS) tried to ruin the stock market and interest rate party with the release of some ‘hot’ employment data. 190,000 new jobs were forecast to have been created in May–but the BLS came in with a scorching hot number of 272,000. Contrary to the BLS numbers the household survey showed unemployment rising to 4.0% So is employment cooling or not? Who knows for certain–guess it depends who you want to believe. Regardless of what you believe the 10 year treasury is trading at 4.42%–up 13-14 basis points. Stocks which started off red are now trading up strongly (about 1/2%).
Oh well–‘party on’! The weekend is here and the weather is beautiful in Minnesota (although the mosquitoes and gnats will carry you away)–I plan to start the weekend in a few hours. Always happy to get a little break from work.
No buying or selling today for me–accounts are down the smallest of amounts but JPM paid me a bushel basket of interest today on CDs which offset some minor losses in preferreds and baby bonds.
Two controversies have arisen about the hot jobs report from the May establishment survey. First, the alternative Household survey shows a loss of 600,000 jobs from April to May. Normally, the establishment survey is more reliable except that voluntary compliance with the monthly establishment survey has called that rule of thumb into question? Second, I am starting to see suggestions on X that much of the increased employment is among the immigrant workforce. I believe that even the Fed (Powell?) referred to immigrants increasing the supply of labor (reducing wage growth?)
I would appreciate any illumination that you all could offer on the reliability and meaning of the data.
From a macroeconomic perspective, do we care WHO (demographically) is being employed? For me, the employers still need the help and are willing to hire a person. They have to expand. Good news as far as I am concerned. I do not see the controversy.
Numbers that may be conflicting are always worth mentioning.
The only likely demographic distinction is that immigrant hiring was probably at a lower average wage. This may tend to understate the rising trend in overall wages. The important point, however, is the stark difference between the household and establishment surveys. Perhaps the household survey does not fully include immigrant households?
If you want to focus on lower paying jobs versus higher paying jobs, I would suggest you focus on the type of jobs being created versus who gets employed. Assuming that some demographics are paid lower wages is problematic. As an example, In Florida, many immigrants are hired by the construction industry. Tough job in the heat. Likely a much higher paying job than a retail job.
I wouldn’t worry too much about the BLS data. It will almost certainly be “revised” down considerably next month. They have developed a habit of downward revisions almost every month.
I suspect that they are trying to have big ‘positive” headlines to help their boss in his re-election bid (BLS staff does the work, but it is under the control of a political appointee, so they seem to “lean into the wind” to support the Biden), and let the revisions roll in to undercut the headlines in a less “headline grabbing” way.
Sorry if this sounds political – I am not pushing either side of the race, only pointing out that the politicians in any administration generally try to support the president who appointed them.
Only a handful (small handful at that) of the 2100 BLS employees are appointed. Less than 10 folks were ‘appointed’.
There are plenty of careers there spanning D and R regimes. Getting 2100 folks to conspire is not possible.
Doug,
No conspiracy necessary.
True that only a relatively few folks at BLS (specifically) are political appointees, but they are the top level bosses, and they report to the department of labor, which is also led by political appointees. The bosses set the tone. This is true at essentially all federal agencies. A few political appointees steer the ship, everyone else in the agency supports the boss.
If you work in the agency and don’t support the boss, you can get punished. You may recall the stories (during the Obama administration) of a bunch of career folks at IRS who were sidelined, reassigned, and otherwise bureaucratically “punished” because they wouldn’t join in “going after” conservative groups. “Weaponizing” government agencies to “go after” opponents is nothing new. FWIW, there were complaints from some career folks under the trump administration too, especially in 2017. It happens under administrations from both parties.
In the case of BLS, they know that their initial numbers are getting wildly out of step with reality, and they could (should) adjust their methodology to be more accurate. it wouldn’t be a difficult thing for them to do but, (IMHO) I don’t think the “bosses” want to change anything that would undercut the “headline numbers” that get announced every month. Those numbers make the current administration look better than the revised numbers.
BLS changes some of their methodologies every quarter – and they are very good about documenting those changes. Unfortunately, most people (esp reporters) don’t bother to read the announcements of those changes – they just focus on the “headline numbers”.
Big yawn on paragraph’s 2 and 3.
You are correct Private. No one can rely on the BLS data anymore. Just look at the constant downward revisions nearly every month the last several years. It is no coincidence this has happened during this period of time
Better to pay attention to the ADP report and household survey than the crap BLS puts out these days
Household survey is of no value. Illegals won’t answer government, many people won’t tell the truth (don’t trust government), they are cutting the numbers of the survey do to lack of funds and they admitted this could make it less accurate.
So is this the first time we have seen the chairman of the Federal Reserve publicly accuse BLS of cooking the books on employment numbers ???
POWELL: THERE IS AN ARGUMENT THAT PAYROLLS MAY BE A BIT OVERSTATED
Several folks have been pointing out this for months here. The investment point being – do not rely on the BLS data