Author Archives: Menzie Chinn

A Quick and Dirty Assessment: How Far Off Is the Establishment Survey Nonfarm Payroll Employment Series?

In the debate over whether the establishment survey nonfarm payroll employment series is seriously overestimating recent (particularly Q2) employment, a reader querulously asks “So you’re saying the Philly Fed screwed up its analysis and we should ignore its work? That’s your view?”. Short answer to first question: No. Short answer to the second question: see below.

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Data Paranoia Watch: “I’ve read that others think the CES was manipulated to provide a more rosy picture heading into the election”

That’s a quote from Mr. Steven Kopits, on why the CES survey showed such a rosy picture on NFP growth. This statement joins a long pile of such allegations, e.g.,  Senator BarrasoJack Welchformer Rep. Allan WestZerohedge, Mick Mulvaney, among others. All I can say is that (1) if there was a conspiracy, they didn’t do a very good job, or (2) it’s a conspiracy so vast that it encompasses not only the other offices of the BLS, but also to ADP.

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Wells Fargo: “Nonfarm Payrolls: Too Good to Be True?”

From House and Pugliese at WF today:

  • The buoyancy of nonfarm payroll growth has seemed at odds with other signs that the jobs market is beginning to sour. …
  • Yet the jobs market is hardly falling apart. A holistic look at the data suggests that directionally the labor market is weakening, but at a measured pace and from a remarkably strong starting point. Not only do signals of demand remain strong on an absolute basis, but job switching remains elevated and the unemployment rate remains exceptionally low at 3.7%.

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ADP Release, and the Flat Employment Growth in Q2 Thesis

The relatively volatile household survey employment series and the Philadelphia Fed’s estimated preliminary benchmark adjusted series suggest flat employment in Q2 (although NOT in H1); see graphs in this post. The ADP release on private nonfarm payroll (NFP) employment today (surprising on the upside 235K vs 150K consensus) suggests otherwise, when taking into account the relatively small change in government employment over the relevant period.

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