Ouch! Nonfarm payrolls +32,000 jobs


For those of you share in my wonderering aloud whether the BLS games the actual data, the answer appears to be a likely no:

U.S. employers hired workers at the slowest pace in eight months in July, fanning fears about the economic recovery and raising doubts about whether the Federal Reserve will raise interest rates next week.

Nonfarm business payrolls grew by a net 32,000 jobs last month, the smallest increase since December, the Labor Department said Friday. The government also said employers created 61,000 fewer more jobs in May and June than was first estimated.

Economists had expected payroll growth of 215,000 jobs and the unemployment rate to hold at 5.6%, according to a survey by Dow Jones Newswires and CNBC.

Ouch: Consensus was for 243,000. Look out below . . .

U.S. Payroll Growth Is Slowest in 8 Months
Wall Street Journal, August 6, 2004 9:25 a.m.

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What's been said:

Discussions found on the web:
  1. burt commented on Aug 6

    maybe this explains Greenspan’s caution about raising the funds rate?

  2. DJ commented on Aug 6

    Hmmm, maybe they forgot to include the counts for the “Self-Employed Work-At-Home Contractors.”

    (BR: DJ is referring to this group of folk: Self-Employed Work-at-Home Contractors)

  3. anon commented on Aug 6


    Just for the record, I only post as anon because I already get enough spam in my email, and I don’t want the bots that troll these comment threads sending me more. I couldn’t care less if you or the other 10 people reading this know who I am, but I do care if the spammers of this world do. If it would reduce the creep-out factor for you, I’m happy to give you a call at work, where I will reveal my name, address and phone number. Just say the word.

    On August 2, the dow closed at 10,179.16, the NASDAQ at 1,892.09. You said, and I quote, “All this suggests that the potential reversal we mentioned on July 22, 2004 is starting to occur.” A hedged prediction? No doubt about it. But a prediction nevertheless.

    We are going down, Barry. Either there isn’t enough money on the sidelines to reverse the trend, or it is too nervous to do so. Either way, the downtrend remains firmly in place. Don’t fight the tape.

    [Barry notes: Send me a private email — at least I’ll know you’re not chicken]

  4. Fred Boness commented on Aug 6

    In March there was a high jobs report and the market headed down. Now we have a low jobs report and the market is headed down. Would it help to just stop the reports?

  5. Fred Boness commented on Aug 6

    Going to the actual BLS release I see the establishment survey part says 32,000 new jobs. The household survey part says 629,000 new jobs.

    I give up.

  6. Mike commented on Aug 6

    Ditto on the anti spam, anonymous post thing. I’ll do the same.

    Barry, although some people DO think the BLS games the data, my take isn’t that they intentionally game it, but that their methodology is just flawed.

    The real problem is the birth/death model which can either add or subtract from the actual number of jobs created. Statistician Jim Willie has said it correctly:

    “However, the reality is that within the US Economy, jobs are produced by statistical models far more than from employers. Over 1.1 million new jobs show up on the Birth-Death model from the Bureau of Labor Statistics, which accounts for over 75% of claimed job growth. On the news, one can see proud claims of job growth, when they are mere estimates from questionable sources. This essay will not examine the fallacious grounds for that B-D model. Leave it that the model depends on data from an era long gone, before China was granted the Most Favored Nation in 1999, before worldwide connectivity and high-speed data transfer, before globalization had taken root. The B-D model probably is worthless; it is surely indefensible.”

    Indeed, if you look at this months’ jobs’ data, you’ll see that this was the first month since January that subtracted workers from the total number, whereas Feb-Jun added a considerable number of workers to the totals. So it should come as no surprise that the jobs number was low! The birth/death model adjusted 91,000 jobs away! See http://www.bls.gov/web/cesbd.htm

    And the monthly revisions have been downward, so I think that the birth/death model is as bad as Jim Willie says.

  7. Mike commented on Aug 6

    One other thought: Time for Kudlow et al to switch back to the Household Survey from the Establishment Survey. Heh, whatever works.

  8. Barry Ritholtz commented on Aug 6

    We thoroughly debunked the Payroll survey canard.

    Anyone who makes that claim is intellectually dishonest, and a worthless hack.

  9. Mike commented on Aug 7

    So, that would be Kudlow, right?? :)

  10. Barry Ritholtz commented on Aug 7

    Kudlow is now a “TV Personality” — his econonic prognostications on air are not the same as the rigorous work he does (did) as a pure supply side economist. He doesn’t hide his politics — he was Chair of the Bush-Cheney transition team.

    I look at K&C as financial entertainment (Infotainment?), and Kudlow’s job is asking probing questions of guests as a way of elucidating an issue.

    He had Paul Krugman on the other day, and there is definitely a grudging respect there . . .

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