Shortly after the August “goldlilocks” jobs report hit at 8:30am ET on Friday, which first sent yields tumbling as markets focused on the surge in the unemployment rate before a sharp reversal sent long-end rates in the opposite direction as attention instead turned to the jump in workers re-entering the labor force (as well as the stronger than expected ISM print), we explained why, lost in the din over the attention-grabbing headlines, the details inside the report showed just how ugly the August nonfarm payroll report truly was.
For one, we have now seen downward monthly payrolls revisions for every single month in 2023, a statistically improbable outcome without some political interference.
Then, there was the relentless increase in “spreadsheet” jobs at the BLS as the Birth-Death model added another 103K jobs last month (more than half), and has boosted the actual jobs number in 6 of the past 7 months, even though the pace of new company creation has collapsed in the past year compared to where it was in the immediate aftermath of covid (when new business creation was the biggest fraud around, as hundreds of billions in taxpayer funds would become available to new businesses, resulting in – what else- millions in new businesses seeking government handouts from the PPP program). For more on the birth-death gimmicks used by the BLS read “One Bank Calls Out Biden’s BS: Finds BLS Has “Greatly Exaggerated” July Jobs, Real Print Is Negative 30,000.”
And speaking of negative job prints excluding B-D adjustments, SouthBay research pointed out that in keeping with tradition, the August payroll was a number almost entirely driven by the Seasonal Adjustments, which in August “created” 159K of the 179K Private Payroll growth, or 90% of the total!
In other words, as shown in the next chart, the un-distorted data (the non seasonally adjusted data) painted a very different picture from the 187K reported and seasonally adjusted. In fact, as Southbay calculated, unadjusted August hiring was the second worst since the Great Recession in 2009!
Turning away from the quantitative, and looking at the qualitative composition of the jobs report, things got even uglier, because one month after a staggering collapse in full-time jobs in July, the BLS reported that in August the number of full-time jobs dropped again, sliding by 85K to 134.2 million, and followed the whopping 585K plunge the month prior, which brings the two-month total drop in full-time jobs to a whopping 670K, the biggest 2-month plunge since the covid lockdowns in early 2020 when 12.5 million full-time jobs were lost in one month!