The monthly BLS employment report released today said 225k new jobs were created, but it included the hypothetical Birth-Death model that added 141k hypothetical jobs. Thus the net true growth was 84k, less than the 100k a month needed to offset population growth. Therefor jobs actually declined on a relative basis.
The Birth-Death model is an allowance for employers to take plenty of time to log in hiring of new employees. In reality with today’s strict laws about fast, accurate payroll tax withholding and the requirements to verify that new employees are not illegal aliens there is no need for the Birth-Death model, thus its use substantially distorts the data.
Manufacturing jobs, a source of good paying, “real” jobs (not sub-minimum wage unstable independent contractor gigs), declined in 3 of past 4 months. A chart of industrial production shows it is down 2% from the high of 2007.
The weather was unusually warm in January thus more work was available which distorted use of seasonal adjustments in the data. Bond yields and stock prices declined, so the market is forecasting less job growth. If the growth was real then bond yields should have risen today. Wages were up the same as CPI, so no real wage gain in January.
Investors need independent financial advice about the risks of misunderstanding employment growth.