Exposing The Lie Behind The Nonfarm Payroll Numbers

Tyler Durden's picture

While we have already extensively deconstructed the quality components of jobs in the US, showing first that in June 240K full time jobs were lost, even as 360K part-time jobs were "gained", and second that so far in 2013 only 130K full time jobs have been added offset by 557K part-time jobs, we had sinking suspicions that there was something off with the quantity component as well: after all, at an average monthly gain of precisely 201.8K jobs in the past six months (or in 2013), this number seemed just a little too perfect considering the Fed's implicit target of generating just over 200K jobs in a half year period before it begins tapering, which in light of declining gross issuance and less monetizable instruments, has been the Fed's goal all along. Today, courtesy of the monthly JOLTS survey we got just the confirmation we needed that, indeed, the official non-farm payroll number as per the Establishment Survey has been substantially off to the tune of a whopping 40% above what is quantitatively happening in reality.

The JOLTS, or Job Openings and Labor Turnover Survey, gets little respect for the main reason that it is one month delayed. Indeed, moments ago it just reported data referencing the month of May. Considering last week we got June's NFP data, this is largely irrelevant. Furthermore, since most people simply look at the survey for the simple "Job Openings" update and compare it to estimates, it provides little actionable data to the HFTs and algos that are all that's left of market traders these days.

However, what also hides inside the JOLTS survey are two other data sets: Hires and Separations. As the name implies, these show how many new hires and how many workers left (either quit or were terminated) businesses. The delta between the Hires and the Separations foots with the actual reported number of job additions, which intuitively makes sense - the net number of added jobs per month is the Hires over the Separations. No rocket surgery there.

So how does the chart look when comparing NFP monthly data with JOLTS Hires less Separations?

Presenting exhibit A: 13 years of JOLTS vs NFP data.

What becomes obvious when looking at the highlighted area, is that something is very much afoot in BLS-land.

Consider April: according to JOLTS, there were 108K job additions. According to the NFP data, however, the number was 195K in new jobs created.

Or how about May? According to JOLTS, in May 118K jobs were added. Once again, just about 90% off the NFP reported 195K.

And so on. In fact, if one looks at the data for all of 2013, one can see that JOLTS averages some 145,200 workers, while the Establishment Survey data shows average monthly gains of 201,833.

Or just about a 39% difference!

The chart below shows how through May (because remember, it is delayed by a month) JOLTS indicated only 726K new jobs created, while the NFP report indicated over 1 million, or 1,016,000 new jobs to be specific.

Finally, looking at a simple moving average, the "bullish bias" difference to NFP reported data is now only as big as it was just after the Lehman failure!

There is now a 69K trailing three month average benefit to NFP compared to what JOLTS is implying!

In other words, the headline (and algo moving) NFP data is overblown by some 40% cumulatively when looking at 2013 data. It also means that for the NFP discrepancy to be fixed, there has to be one month where there is a 290,000 job decline according to the Establishment Survey.

We urge all readers to recreate the above result on their own: the Hires timeseries can be found here, the Separations timeseries is here, while the matching reported Nonfarm Payroll series is, as always, here.

We hope that, if nothing else, this above is a lesson to the BLS: when manipulating data series across dimensions, make sure the manipulations foot across, not just in 1 dimension!

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Cacete de Ouro's picture

Prepare to be droned by a Prince Hall 33rd Degree Freemason!

BaBaBouy's picture

More Bullshit FED To The SHEEPLE ...

clones2's picture

"LIE" is such a strong word... Maybe they're just not good at math or counting...

SafelyGraze's picture

make america competitive

- reduce the number of employed persons

- reduce the income of employed persons

- devalue the currency

- staurate households with debt

so *now* who's going to pay for those stinking imports? huh?

that's right.


and that's how we make america competitive

RockyRacoon's picture

Rest assured that this information will NOT be reported on tonight's Kudlow Report.

NoDebt's picture

They gotta be pretty desperate to start this shit the year BEFORE and election year.  Normally this sort of monkey business only ramps this far up 6-9 months prior to the election.

fockewulf190's picture


The Great Reset must truly be right around the corner.

gmrpeabody's picture

Seriously..., you think the government would actually lie...

Oh..., wait

NoDebt's picture

You make that sound so black and white.  It's not a matter of lie vs. truth.  It's a question of  the intesity and breadth of the lying.  This is pretty big for a non-election year.

creepy_ass_cracker's picture

Actually at this point I fear that if they were to actually tell us the truth concerning the state of the national economy we would most likely go immediately into a deep state of depression followed by a high number of suicides.  Who would pay the taxes then? So it is in TPTB best interrest to keep telling lies, fuck the sheeple.

yogibear's picture

And when the banksters get desperate they will start a war (make plenty of money off it) and start taking from accounts (Like their criminal icon Jon Corzine).


"The best way to rob a bank is to own one."

RazvanM's picture

Funny how this was the medicine recommended to 3rd world countries to become competitive. Wait a minute, this wasn't correct?

EclecticParrot's picture

Well, if it was just an error, then the last time a screw-up of this magnitude occurred was when Fred Flintstone’s caterer sent the clown with the Rock Cola to the Water Buffalo Lodge, while the dancing girls and cactus juice appeared at the kids’ party.

McMolotov's picture

The government secretly spies on us. The government secretly hides details of the Bin Laden raid. The government secretly fudges all of its books. Notice the pattern?

In short, this government hides facts and lies to its citizens on a daily basis. When people hear the term "banana republic," they picture certain things, like dictators in snazzy faux-military uniforms. I'd argue the defining characteristic of all banana republics is a paranoid devotion to hiding the truth from ordinary citizens. Power is derived not just through force but also through muddying the waters. Transparency is required for a functioning, stable society; an obsession with secrecy is required for a republic to reach banana status.

The bananopacity of our republic has never been higher.

Kirk2NCC1701's picture

+1. for 'Bananopacity'.
Let's start a Bananopacity Index (BI). ;-)
Linear or log scale?

Jumbotron's picture

Linear or log scale?

How about "Cosmic" ?  Parsecs anyone ?

Dick Buttkiss's picture

"Everything the state says is a lie, and everything it has it has stolen." — Frederich Nietzsche

NEOSERF's picture

Sort of like your deposits are FDIC insured....sure they are...better to consider your deposits an at-risk loan to a shylock.

gaoptimize's picture

I join Minnesotans For Global Warming in calling for CO2 levels consistent with bananas growing in the southern states of our banana republic.

spine001's picture

BLS any Snowden at the BLS?

And I hope that they never learn to do multidimensional data manipulation!

GOSPLAN HERO's picture

Is Obama a Prince Hall Mason?

SeattleBruce's picture

Clearly he can be anything they want him to be.

Shizzmoney's picture

Creating low wage jobs = bull market

LawsofPhysics's picture

Creating desparate people who will turn to a thriving black/tax-free market for survival, even better.  fucking bring it!!!

Herd Redirection Committee's picture

Its coming, but there will be little in the way of long-distance black market trade.  Long distances mean more chances for you to be extorted by various ex-Military, ex-LEO, "pay the toll to pass".  Most likely they take 10% of your goods as payment, duties, except now you pay duties within the nation!

see France in the 18th century, Angola in the 21st century

LawsofPhysics's picture

Sorry, I don't see a thriving local economy as something bad.  Fucking bring it.  Shit, many of the folks in our farming Co-op are ex-military.

The bottom line is folks are tired of the paper-pushers and their bullshit paper promises.  we know the value of our labor and have plenty of room for useless paper-pushers to work as our sharecroppers if they want to eat.  Bring it bitches...

eclectic syncretist's picture

Does anyone here believe that the BOL or the Fed has any interest at all in truth or reality when their very existence is tied to perpetuating and propagating the lie that intrinsic value is something that can be printed at will?  Of course it's all a bunch of lies, and it always will be, because that's what fiat economies are based on; a lie.

Shizzmoney's picture


see France in the 18th century, Angola in the 21st century

Or China and Russia today

GubbermintWorker's picture

And I have just the currency for such a market....gold, silver, lead, and lead delivery systems.

monopoly's picture

I am sure this is just an honest mistake and the BLS will correct it next month....Or Not.

pods's picture

This is probably why they have that yearly -600k revision to the series.

Paging Joe Lasagna, time to get your ass on CNBC and tell us all why we need to buy Doucebank stock.


buzzsaw99's picture

Joe knows banking. He was at Lehman Bros for crissakes! [/very high forehead]

buzzsaw99's picture

db is effing doomed!


See the little maggot with the earpiece and the makeup
Yeah buddy that's his own hair
That little maggot got his own jet airplane
That little maggot he's a millionaire


[/money 4 nothing]

SDShack's picture

Yep, I love how "stable" the employment picture from the BLS is the last 3 months... 199, 195, 195. Look how that DOESN'T correspond to history, which shows employment widely swinging from one month to the other (90K jobs in a one month swing example). I wonder what the statistical odds are for this recent "stable" period compared to the historical. Definitely looks like an "Out-liar". 

ejmoosa's picture

Over the last 22 years we have not had two consecutive months that showed numbers within 4k.  

Suddenly we have three in a row?

You have nailed it.

ejmoosa's picture

I've a profits/jobs model that displayed a correlation of .91 for a period of 15 years or so.

Then suddenly, over the last year and 1/2, a complete disconnect.

I began to think that it ws due to the QE effects ,as that $85 billion injected each month ws like $85 billion of profits that had not been earned spread to certain sectors.  That would explain why profits have fallen so sharply and hiring has not done what I would normally expect.

The only thing I know for certain is that the numbers do not make any sense.

To claim that hiring is suddenly ramping up while profits and margins are at their lowest levels if 4 years is nonsense.

Welfare claims also point to the nonsense of a stregthening jobs environment.

My model pointed to no net new jobs for the period 9/12-9/13.

Something is drastically amiss.

LawsofPhysics's picture

Charles Biderman, is that you?

ejmoosa's picture

Just saw his picture...God I hope that is not me.

bigdumbnugly's picture

well sadly i'd have to take that trade.   and i could live with that view from sausalito...

worbsid's picture

The number of used-to-be-full-time-employed replaced by automation is hugh.  A couple years back three full timers in our office were replaced by a computer and a good program.  How many digital spot welders are there?  On and on.  In addition to all the other crap going on, we are being replaced by computers.  A few days ago, the TV went off line.  I called and a computer answered.  The computer and I went through the trouble shooting maze and the computer re-booted my line and the TV worked.  I said, "thank you" ... Afterward I laughed about that, I said thank you to a computer. I programed the damned things and now I am saying "thank you" to an algorythm somewhere in a cloud.  Bryond belief?  No not really. 

FlipFlop's picture

This is not about the topic, but about general impact of alternative news such as ZH.

It seems that reporting in ms papers has improved, reporting in some papers reflects pretty closely ideas presented in ZH. I might be wrong since this is just an feeling based observation.

Anyway, alternatives force establishment to think harder, which is good.

Herd Redirection Committee's picture

I don't read MSM any more, and won't be going back.  How exactly are you supposed to regain credibility when its clear you have allowed your media empire to be used for disinformation dissemination?

Probably just a final attempt to stay relevant.  I doubt it means they are no longer disinfo agents of the Empire.

NoDebt's picture

Become familiar with the term "acceptable level of dissent."  That's all you're seeing.  They're just driving a stake in the ground to declare that they are still relevant and can give a small amount of push-back. 

Even the tools in the MSM can see there are obvous areas where things don't add up.  And if they can't for themselves they only need to visit ZH and see many of the themes show up in similar stories over and over again.  By the time you read about "rehypothecation" or "HFT trading" or "collateral quality" for the 5th, 10th, 20th or 50th time..... well, even really stupid people (like me) will eventually clue in that it's not tinfoil-hat conspiracy stuff, it's based in fact. 

The difference is that the MSM has no belief there is anything deeply wrong.  2008 was a blip that is now past and can never happen again (despite nothing having been fixed or learned from it).  Everything is fine, it's just a few "untidy" areas they shine their little flashlight on from time to time.

FlipFlop's picture

This is a good reply. I am referrimg to my local papers. Sometimes they have almost thensame stories as ZH. Not everyday but occasionally. That sort of news coverage is surprising.

I cancelled all MS papers long ago as useless socialist bullshit, but there has been a change lately.

sunny's picture

Of course it's all lies.  So what?  It only matters that the moment the news release hits the wires the algos have something to analyze.  A word stream that indicates improved numbers, no matter how false or obtuse is all that matters.  Markets soar.  Welcome to the new abnormal.


Yancey Ward's picture

The corruption is eroding all standards.

Jumbotron's picture

Hmmm....well...lookee here......I just found the Devil.

He really IS in the details.

Good Sleuthing Tyler !