Job Number Disappoints, But Could Have Been Worse Without Birth/Death Model

Total non-farm employment dropped 125,000 in June, as the government laid off 225,000 temporary census workers.

Private hiring in June rose 83,000, against the economists' consensus of 112,000 or over 25% short of the consensus.

Unemployment rate dropped to 9.5%, mostly because people stopped looking.

But the spin is this, as gleaned from the article linked above:

The jobs data, however, signaled continued growth, albeit sluggish.

"No double dip (recession) but no rapid recovery either," said John Silvia, chief economist at Wells Fargo in Charlotte, North Carolina.

Really?

So I went to check the infamous (or I should say job-creating) Birth/Death Model at the Bureau of Labor Statistics (BLS) to see what jobs were "created" in June.


The largest job creation category is Leisure and Hospitality, which saw a sudden burst of "hiring" in April and keeps on growing. It strikes me as rather odd that this is against the Gulf of Mexico oil spill which is killing the tourism industry in the Gulf states. I suspect they are just plugging the higher numbers for the travel season (April - July), just like they do every year.

The second largest category is Construction. Though down from May by over 40%, it is still at the robust April level. This again, follows the pattern every year at the BLS.

Ah, and Business and Professional Services! Who can forget the temp workers?

Leisure and Hospitality is the only category who saw an increase over the previous month.

The Birth/Death Model is a statistical model which assumes that for each business that dies, there is a birth of new business somewhere. Another "mark to fantasy" model as far as I'm concerned.

Tweet