Sunday, July 8, 2012

Next Month's Job Growth Could Be Even Lower

The Labor Department released jobs numbers for June today and the results were disappointing. Estimates were that non-farm payroll would add around 100k jobs last month. Instead they added just 80K, which is just over half the number needed to keep up with population growth. James Pethokoukis at AEI has put up an updated version of this familiar chart.

Notice the red dot showing where we are now. It's a full two points higher than where the Obama team thought we'd be at this point without the stimulus plan. And as Pethokoukis notes, the unemployment rate only looks this good because so many people have abandoned the work force. If you include all the people who were part of the workforce when Obama took office, unemployment would literally be off the chart at 10.9 percent.
There's one additional wrinkle to today's numbers that was noticed by Bryan Preston over at the PJ Tatler. According to CNBC, "The birth-death model, which approximates the amount of jobs gained through new businesses created too recently to be counted in the formal survey, added 124,000 positions, meaning that without the estimation the total count would have been a loss of 44,000."
The birth-death model appears to be a fairly good approximation of actual jobs being added, but according to BLS the data varies dramatically on a month to month basis. Some months the b-d model adds a lot of jobs and some months it adds few or is negative. So which months tend to add jobs? From the BLS FAQ on the birth-death model:
Months with generally strong seasonal increases such as April, May and June generally have a relatively large positive factor.

Read more: http://www.breitbart.com/Big-Government/2012/07/06/Weak-Job-Growth-and-Worrisome-Signs-for-Next-Month

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