Was something wrong with the latest jobs report?
On Friday the Bureau of Labor Statistics issued its monthly employment survey. Actually, they released data from two separate surveys: one of business establishments, and one of households. The establishment survey is less volatile. Each month the Bureau contacts about 145 thousand establishments representing 550 thousand worksites. About 50 million workers are in this sample.
By contrast, the household survey canvases only 60 thousand households. The smaller sample size means the results are more variable, but it’s also more sensitive to changes in the structure of the job market—like an increase in start-ups or more self-employment. As with many reports, the trend is more important than the level.
Last month both surveys gave odd results: much weaker than expected, and weak in strange areas. Sure, the weather was cold. But was it cold enough to eliminate 25 thousand accounting jobs? Were storms in the Midwest responsible for 15 thousand educator job cuts? Where did they all go–Account-temps? Temporary employment rose by 40 thousand—usually a good sign. But maybe not.
The frustrating thing about an outlier report is you can’t tell whether it’s an outlier or a trend-change for months—when the dissonant data are either refuted or confirmed by additional information. One thing that’s certain: the Fed will have some interesting discussions as they debate the taper-tango.
Douglas R. Tengdin, CFA
Chief Investment Officer