JOBS REPORT: TURN AND FACE THE CHANGES
Friday's job report showed a gain of 517,000 jobs and a decline in the unemployment rate of 3.4%, while the civilian labor force increased by 866,000. This is more than 3x the expected number. This data comes from the Establishment survey; what does the Household survey have to say? As a reminder, the BLS conducts two monthly employment surveys that each collect different pieces of data but should be generally consistent.
Location Strategy has highlighted all of the employment subgroups that remained unchanged in January. Essentially, if the labor force participation rate is unchanged (i.e. % of population that is working) and the number of unemployed persons is unchanged, how did the number of employed people increase? Is the BLS suggesting that the US population increase by 830,000 in January? Not exactly; the increase in January can be attributed almost entirely to the seasonal adjustment - you can see below how January seasonal factors have changed over the last decade. I would guess they are still likely inaccurate after the pandemic. It takes about 3 years of data to develop proper seasonal adjustments.