Fisher Investments Editorial Staff
Politics

Donkeys, Elephants and Employment

By, 08/06/2012

Jobs. Hiring. Employment.

In an election year, those words generally conjure images of political debate over who can “create” more, policy prescriptions, and the like. And this year has certainly had its fair share already. The heated rhetoric seems poised to only increase in the three months between now and election day. And July’s employment situation report seemingly gives fodder to both the Obama and Romney campaigns.

The report showed contradicting data between the two BLS surveys. Here’s what the data show.

The establishment survey, generally looked to as the more accurate of the two BLS surveys for raw hiring figures, showed private employers added 172,000 jobs. Government shed 9,000, resulting in a net addition of 163,000 hires—more than double June’s downwardly revised 64,000 and well above analysts’ estimates of about 100,000. On an industry level, manufacturing, education and health led the way. The BLS did note the automotive industry delaying summertime plant retooling may have also contributed to the expectations beat, which some have interpreted as a statistical quirk. Yet, at the same time, increased demand drove the delayed retooling, which doesn’t seem like statistical skew to us. So it would seem, at least according to the establishment survey, Friday’s was a fairly good report.

On the other hand, the household survey—the source of the unemployment rate—showed 195,000 fewer people were employed, driving a slight uptick in the unemployment rate from 8.2% to 8.3%. (In fact, though, the increase was from 8.22% to 8.25%, but as the rate’s typically rounded to one decimal, it seems the higher number was broadly reported.) But either way, the two surveys seem to be at odds.

Now, that might seem unusual, but in fact, it’s been a fairly common occurrence in the past three years (see Exhibit 1).

Exhibit 1: Two Measures of Monthly Hiring (in Thousands)

Source: Bureau of Labor Statistics, as of 08/03/2012.

As we’ve often written, the forward-looking economic implications of unemployment—be it very elevated or near cycle lows—are few. But with something for both the right and left, a report like Friday’s only adds to a future that’s likely packed with unemployment-related political rhetoric.

 

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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