Last Friday’s bomb of a report from the U.S. Labor Department has not exactly gone away. This took up perhaps more than it should have of weekend conversation time. In fact, the report seemed so far off base that we cannot help but ask if the Labor Department’s computers simply just botched all of the numbers. The report was even worse than what the bears were expecting to see during the government shutdown.
For an unemployment rate to sink to 6.7% from 7.0%, with that same 7.0% being expected, in a single month means that maybe there was more than mere retirement and people who have given up looking for work coming into play. And for the ADP payrolls to have come out well above the 200,000 at the same time that the non-farm and private payrolls both grew at less than half of expectations and well under 100,000 we cannot think that this was “normalized” order inside the Labor Department’s computers. The whisper numbers had moved to well above 200,000 when the formal reports came in well under 100,000.
Then on Monday came a Conference Board report via its Employment Trends Index, also for December, showing gains were made yet again for the fifth month in the last six months. This index rose to 115.76 in December from a higher revision of 115.72 in November. The figure is 5.2 percentage points higher than a year ago.
The Conference Board did try to clarify what was happening in the workforce participation coming in at only 68.2%. After all, this was the lowest reading in about 35 years. The statement said, ““Despite the disappointing job numbers for December, the improvement in the Employment Trends Index is signaling solid employment growth in the months ahead. With the labor force barely growing, partly due to the massive wave of baby boomers retiring, this job growth will continue to rapidly bring down the unemployment rate.”
Another tell that the report may have been better than Friday’s numbers may have telegraphed was that six of the eight components from the Conference Board showed growth. This is the order, from the largest positive contributor to the smallest:
- Number of Temporary Employees (at 2.816 million, highest reading of 2013)
- Consumer Confidence Survey Percentage of Respondents Who Say They Find “Jobs Hard to Get” (32.5% -lowest reading of 2013 by over 4.5%)
- Job Openings at BLS (4.03 million, the highest in 2013)
- Industrial Production (101.445, the highest of 2013)
- Real Manufacturing and Trade Sales (1.158436 trillion, highest of 2013)
- Percentage of Firms With Positions Not Able to Fill Right Now (23%, a tie for high of 2013)
Maybe Baby Boomers are retiring in droves, but the Labor Department has suffered from poor tabulation skills for years and years now. Its flaw is not even localized under any one regime, because it seems to be consistent regardless of who is President.
Another issue to consider here is that if there was an error it was not one of those errors that would have been accused of being intentional errors like we have heard in the past. After all, this was a negative report, and one that did not look favorable upon the real recovery in the economy. That at least pertains to payrolls, while the formal unemployment rate is another issue.
So, what issues would have kept last Friday’s report from being an error? Well, healthcare concerns could easily be a culprit. Another issue is that employers can keep milking out more productivity from the pool of employees. Lastly, companies are just simply not eager to fill vacancies immediately – because maybe they can get the existing employees to pick up the slack from a vacancy.
We cannot say with any certainty that the Labor Department’s report was simply full of errors last Friday. Whether or not we doubt the credibility of the report is a completely different matter.