Posted by Karl Denninger
In February, employment in the federal government edged up. The hiring of 15,000 temporary workers for Census 2010 was partially offset by a decline in U.S. Postal Service employment.
Headline number was -35,000 and the unemployment rate held at 9.7%, both headline. Everyone’s fear of a huge weather impact was instantly dashed, as the BLS said they couldn’t quantify any changes in their sampling “accuracy.” Given their methodology the most-likely place for any real impact to show up is in the hours worked, not the actual employment rate, and that did tick down by a tenth.
The internals in the household survey, however, showed real improvement.
Unfortunately we’re nowhere near the 200,000 or so net job adds that we need to find in order to cover new entrants to the workforce, but these tables are a marked improvement over the previous months:
Essentially flat-lined. That’s good, actually, off the household numbers.
Ah, that’s where it came from. Essentially all of the “improvement” in the monthly household data came from those formerly leaving the labor force coming back in.
That is, there was no net hiring of new entrants to the labor force, but the insane rate of “drops” reversed and some of those who were discouraged re-entered the workforce. And indeed, if you look at the U-6 number you’ll see that not-seasonally-adjusted it fell from 18.0 to 17.9. Note that on a seasonal adjusted basis BLS claims that the U-6 rate increased by three tenths (to 16.8 from 16.5), which is curious and implies that the seasonal expectation is for a big rise in shift out of “not-in-labor force” and other “marginally attached” people – and they didn’t get it.
Interestingly enough if you look at the previous years monthly numbers do show a significant spike in this month. Is the BLS overly pessimistic with their seasonal adjustments or are we seeing a real turn? No idea – yet – but seasonal adjustments won’t account for Census temporary hiring, which will continue through the spring (and then result in firing come summer!)
Everyone (myself included) expected census hiring to be significnat, and it is. The release of the data caused an immediate spike upward of a few points in the futures, but it also hammered the ten year Treasury rate (upward.)
The key is sustainability, and unfortunately the census employment will skew this in a way that is going to be extremely difficult to back out until the summer months when it ends and those people are laid off. If that hiring and the pay disbursed as a consequence produces a significant upward swing in spending, there could be a salutary knock-on effect in the private sector. But that’s a big if, as it requirs that those people employed by the Census spend the money instead of paying down debt and deleverage their personal balance sheets.
All-in the report is a definite positive but right in line with expectations, given government activity. My short-term concern is the offsets from announced job actions in various state and local governments as they attempt to avoid their own insolvency, balanced by the Census activity.