Nonfarm payroll jobs increased by 1.37 million in August according to the latest Labor Department release. The unemployment rate dropped to 8.4%; both of those numbers beat projections of economists by Dow Jones, which had been for growth of 1.32 million and a drop to 9.8. Also, the numbers which include workers who have given up looking for jobs and those with stopgap part-time jobs dropped from 16.5% to 14.2%.
This comes six days after the Department of Labor announced a change to how it seasonally adjusts unemployment figures. From the release:
In the week ending August 29, the advance figure for seasonally adjusted initial claims was 881,000, a decrease of 130,000 from the previous week’s revised level. The previous week’s level was revised up by 5,000 from 1,006,000 to 1,011,000. The 4-week moving average was 991,750, a decrease of 77,500 from the previous week’s revised average. The previous week’s average was revised up by 1,250 from 1,068,000 to 1,069,250.
Seasonal adjustments are effectively “multipliers” on various job sectors which are supposed to be based on historical trends for temporary employment. Inclusion of them allows the government to tweak the actual figures, theoretically to produce a more accurate picture of the job field in the United States. When they are changed it renders new data reports as fundamentally incomparable to older data, because it’s using different numbers. A new data set is started; inclusion of old data will produce a curve, but the interpretation is intrinsically flawed. Mathemagic.
The numbers are particularly curious as, when examining the excerpted summary above, it becomes clear that the adjustments resulted in a dramatic overall decrease of unemployment claims.
Nevertheless, the Dow Jones reversed a downward trend when the unemployment figures were released, and there will undoubtedly be a focus by the President and his administration on the modified numbers today, in an effort to frame the economy as roaring back.
On a related point, China today issued a warning through its state-backed Global Times that the nation, the United States’ second-largest foreign creditor, is planning to drop its US treasury holdings from more than 1 Trillion to 800 billion but may drop far more than that. The official reason is the skyrocketing U.S. debt, which is certainly an item of concern; that said, the sociopolitical pressures between the two countries is likely a greater factor.
In other China-US financial news, the trade gap between the two countries, which President Trump vilified on the campaign trail in 2016, saying it indicated that China was “raping” the United States and that it was “winning”, is now larger than it was when President Trump took office. Per the Census Bureau, in January 2017, the gap was $31,380 million. After his first full month as President, it had dropped (as is normal from January to February, as Christmas purchasing is no longer a factor) down to $23,045 million. At the end of Trump’s first full year as President, February 2018, it was at $29,261. Through July (the latest numbers released) it is at $31,620… which means the deficit which Trump swore was destructive to America has increased over his tenure, even with the significantly curtailed purchasing from China amidst the trade war and pandemic issues.