I love NFL season, and although it is a little juvenile, I also love when the guys on ESPN’s Monday Night Countdown go through their “C’mon, man” segment. In that part of the show they recap plays and calls that occurred during the week that they thought were ridiculous, and then they exclaim, “C’mon, man!!”
Last week the non-farm payroll number was slightly better than expected, but the big news of the day was that the unemployment rate ticked down to 7.8%, which was much better than economist expectations of about 8.2%. Well it didn’t take long for folks to start questioning whether the numbers were being manipulated in an election year. During this week there has been a flurry of conspiracy theory articles making their way through the mainstream press on just this subject.
Conspiracy theories are fun to read, and I have to admit to wondering whether there is the possibility of some massaging of the data occurring as elections draw near. But honestly, for anyone watching the weight of the evidence that has been building in the jobs market, the numbers that came out were not that shocking. There have been a host of labor market indicators that have been improving off of a low base over the past few months, most of which aren’t mentioned in the conspiracy theorist articles that have been making the rounds lately.
A few examples of jobs data that has been improving and suggest that Friday’s numbers should not have been that unexpected are below:
- The ADP National Employment Report has been averaging between 150k and 200k new jobs over the last four months
- The Manpower survey of employment has been trending up
- The Challenger-Grey survey of layoff announcements has recently crashed
- The Conference Board’s measurement of “Jobs Hard To Get” has been trending down
- One of our favorite barometers of the job market, the four-week moving average in initial unemployment claims, continues to be in a steady downtrend
- The employment component within the ISM Manufacturing survey ticked up this month
- Our Pinnacle proprietary employment model, an optimized model of 10 different job factors, currently shows a reading consistent with job growth of about 150k per month
Look, I’m not saying that all is great with the labor market. Monthly job growth below 200k is still very slow, and a 7.8% unemployment rate is still very high considering that we are three years into an economic expansion. I could also cherry pick some other labor market measures that are less than stellar. But some of these articles being passed around recently could have been written by Mel Gibson’s character in the movie Conspiracy Theory. Are jobs still structurally impaired? Yes. Do they seem to be improving a tad off of a very low base? They do. Are there strange seasonal and statistical anomalies that hit the monthly payroll report almost every month? There are. Was Friday’s number a blatant attempt to rig the election? C’mon, man…