Please see the summary of corporate employment dynamics for the second quarter of 2022.
- From March 2022 to June 2022, gross job growth from the opening and expansion of private-sector businesses was 8.3 million, a loss of 185,000 jobs from the previous quarter.
- There were 8.5 million private sector businesses, an increase of 1.6 million jobs from the previous quarter.
- The difference between the number of gross job gains and the number of gross job losses gave a Net employment loss of 287,000 jobs in the private sector in the second quarter of 2022.
Gross Job Gains
- In the second quarter of 2022, gross employment gains accounted for 6.4 percent of private sector employment. Gross employment gains are the sum of employment gains due to expansions of existing establishments and the addition of new jobs as establishments open. Gross employment gains at expanding operations totaled 6.6 million in the second quarter of 2022, down 335,000 jobs from the previous quarter.
- Opening operations accounted for 1.7 million of the jobs created in the second quarter of 2022, up 150,000 jobs from the previous quarter.
gross job losses
- In the second quarter of 2022, gross job losses accounted for 6.7 percent of private sector employment.
- Gross job losses are the result of job losses in existing establishments and job losses when establishments close. Contractors lost 6.5 million jobs in the second quarter of 2022, up 996,000 jobs from the previous quarter.
- In the second quarter of 2022, 2.1 million jobs were lost to factory closures, an increase of 651,000 jobs compared to the previous quarter.
This report is what I’ve been saying for months.
Noise vs Reality
November 4th: Full-time employment trend or noise? Despite the headlines, today’s jobs report was pretty weak.
December 2nd: Another strong jobs report? Phooey, and I can prove it
January 6: December employment rises by 717,000, all part-time
Payslips vs employment since March 2022
- Non-farm payrolls: +2,887,000
- Degree of employment: +916,000
- Full-time employment: -288,000
Full-time employment is down 288k since March and 444k since May!
Mainstream media generally misses the big picture captured in the chart above. This is not strong job growth.
The average work week has peaked and total hours are being exceeded
On January 11th, I noticed that the average work week had peaked and the total total hours were overflowing
What does the demand for temporary aid say about a recession?
On January 24th I asked: What does the call for temporary aid say about a recession?
Three BLS data streams
The BLS has three data streams on employment and jobs. Two reports are monthly. The third appears quarterly.
- Establishment Survey: The Establishment Survey, or Current Employment Statistics (CES), is the monthly jobs report to which the Fed and almost everyone else hangs their hats.
- Household survey: The household survey is also published monthly. It is a telephone survey where the BLS asks if someone works or not and if so for how many hours. The unemployment rate comes from the household survey. Oddly enough, people have a lot of confidence in the unemployment rate but not confidence in the employment numbers.
- The Quarterly Census of Employment and Wages (QCEW) is, as the name suggests, quarterly.
QCEW vs CES
While the QCEW data covers more than 95 percent of all employers, the CES sample represents only 6 percent of the QCEW total.
Let that sink in for a second. It shouldn’t take any longer.
The Business Employment Dynamics Summary guidance chart is based on QCEW data.
Q2 QCEW Employment vs. CES Jobs vs. Household Survey
- QCEW Mar-June: -287,000
- Household Survey Employment March-June: -271,000
- CES Establishment Survey Mar-June: +1,047,000
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It seems that the household data makes much more sense than the generally accepted establishment survey.
And that’s for Q2. The second half of the year, especially the fourth quarter, certainly did not gain strength.
The Philadelphia Fed just cut second-quarter jobs by 1.2 million
On December 16th I commented that the Philadelphia Fed just cut second quarter jobs by 1.2 million
A total of 10,500 net new jobs were created during this period instead of the 1,121,500 jobs estimated by the sum of the states; The US CES estimated net job growth of 1,047,000 for the period. Payroll offices in the country remained essentially unchanged from March to June 2022 after adjusting for QCEW data.
The CES program is based on a monthly nationwide survey of approximately 131,000 businesses and government agencies representing approximately 670,000 institutions. These samples are used to estimate total employment not only by states and MSAs, but also by industrial sectors within states and MSAs. In contrast to the CES sample of 670,000 establishments, the QCEW program reported employment figures for nearly 11 million establishments Covered by state and federal unemployment insurance laws in the first quarter of 2021. QCEW data for October, November and December 2021 were released on June 8, 2022.
This estimate was based on QCEW data. We now have the actual Q2 results.
And here’s the kicker.
Our early benchmark process should see major downside revisions in December 2022. Only in February 2024 – with the inclusion of the March 2023 benchmarks – will the CES estimates provide a complete record of US employment for most of 2022. Unfortunately, our early benchmarks delay moments when critical policy considerations are made, but they offer earlier confirmation of obvious changes in recent payroll trends. And ubiquitous, sustained and deep downgrades could herald the NBER’s declaration of a recession.
Don’t worry, it’s just noise.
Monthly advances and declines
- Gastronomy: -0.9 percent
- Grocery stores: +0.0 percent
- Gas stations: -4.6 percent
- General Merchandise: -0.8 percent
- Excluding motor vehicles and gas: -0.7 percent
- Excluding motor vehicles: -1.1 percent
- Nonstore (think Amazon): -1.1 percent
- Motor vehicles: -1.2 percent
- Department stores: -6.6 percent
Real spending fell off the cliff from November and accelerated in December. For a discussion, see What Do Real Incomes and Expenditure Tell Us About the Timing of the Recession?
Indications are that industrial production has peaked and a recession is imminent
Please note that there are indications that industrial production has peaked and a recession is imminent
Is that noise too?
Let’s see what Wonderland has to say.
Alice debates the timing of the recession with the Mad Hatter and the Red Queen
Alice challenged the Mad Hatter, the Red Queen and the March Hare to a debate about whether or not the economy was in recession.
The Mad Hatter, Red Queen and March Hare touted strong jobs as the reason there would be no recession.
For discussion, see Alice Debates the Mad Hatter and the Red Queen on Timing the Recession
I also look at the inflationary aspects of climate change. If you have not yet read this article, please do so.
Please note that in the meantime the Fed is looking at job data which is grossly incorrect and six months old at that.
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