"Jobs Data Nowhere As Strong As Headline" - Analysts Throw Up On Today's Seasonal Adjustment

Tyler Durden's picture

One week ago, the BEA admitted that it had "found a problem" when it comes to calculating GDP numbers. Specifically it blamed "residual seasonality" adjustments for giving historical GDP numbers a persistent optimistic bias. This came in the aftermath of last week's shocking Q2 GDP report which printed at 1.2%, less than half of Wall Street's consensus.

Today, seasonality made another appearance, this time however in the much anticipated July jobs number, which unlike the woeful Q2 GDP number, was the opposite, coming in far higher than expected. In fact it was higher than the top Wall Street estimate.


And, just like in the case of GDP, it appears that seasonal adjustments were the culprit for today's blowout headline print which excluding the Arima X 13 contribution to the headline number, would have been notably weaker.

As MUFG Securities strategist John Herrmann wrote in a note shortly after the report, the "jobs headline overstates" strength of payrolls. He adds that the unadjusted data show a “middling report” that’s “nowhere as strong as the headline" and adds that private payrolls unadjusted +85k in July vs seasonally adjusted +217k.

In Herrmann’s view, the government applied a “very benign seasonal adjustment factor upon private payrolls to transform a soft private payroll gain into a strong gain.”

He did not provide a reason why the government would do that.

Courtesy of Southbay Research, which also blasted today's seasonal adjustment factor, this is how the seasonal adjustments look like relative to history.

We leave it up to readers to decide just why the government may want to represent what would otherwise have been a far weaker than expected report, into a blowout number, one which merely adds to the economic "recovery" narrative, which incidentally will come in very useful to Hillary's presidential campaign.

Yet even assuming the market has no doubts about the seasonally adjusted headline number, as appears to be the case, the other problem that has emerged for the Fed is how to ignore this strong number. As Bank of Tokyo's Chris Rupkey writes, “Let’s see Yellen get out of this one and find something in the data to once again not raise rates in September.” (We assume he did not see the unadujsted numbers.)

As he adds, slowing 2Q GDP growth of 1.2% took Sept. rate hike “off the table” and now “the million dollar question” is whether 255k payroll jobs in July, 292k in June put it back on.  As a reminder, Yellen speaks exactly in three weeks time at Jackson Hole on Aug. 26; “let’s see if she provides some guidance." But while rate hike odds may have spiked after today's report, it is almost certain that, as we said last night, the Fed will not dare to hike the rate in September and potentially unleash market turmoil in the most sensitive part of the presidential race.

As for a December rate hike, there are 4 months until then, and much can happen: who knows, maybe the BLS will even undo the significant seasonal adjustment boost that send July jobs soaring.

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Cognitive Dissonance's picture

I only believe 'official' government statistics. Why would they lie when they are here to protect us?

<Retreating back into my safe space until next month.>

CheapBastard's picture

Canada's real estate is 'collapsing at a breath-taking rate'

Office vacancy rates have soared to 22%, the highest on record, according to the second quarter report by commercial real estate services firm CBRE.

It’s going to get worse: three towers with 2.3 million sq. ft. of office space are under construction in downtown and will be completed by 2018. Of this space, about 1 million sq. ft. is not leased. And even some of the pre-leased space may end up on the sublease market.

Colliers International in Calgary estimates that the overall downtown vacancy rate will approach 26% by year-end 2018. 

Rental rates have collapsed. Landlords are desperately trying to fill some of this space by slashing rental rates. Quoted Class A rental rates have plunged 56% from $40 per sq. ft. in 2012 to $17.50 now….




"Oh, Canada!"



BaBaBouy's picture

Bullshit US Numbers ~~~ Pumping The Hellery Run ~~~

How can CDA be down -32K Jobs (adjusted -320K for US) and the US economy Soaring ???????????

Meanwhile they LOVE attacking the GOLD...

JamesBond's picture

The Donald isn't going to win this election; he won't be allowed to.  The American people are not going to be allowed to change the course of One World Central Banking Fascism.  

There is only one coin.  Yes, it has two sides to give the appearance of choice, but t is only an illusion.




Poundsand's picture

Probably true, but look how far they are having to go and expose themselves to do it?  No one (as I have in the past) can argue that the two parties aren't one and the same any longer.  No one can argue that the media isn't biased.  No one can argue that the DNC candidate is not an outright liar and has corruption all over her like white on rice.

wee-weed up's picture

Yep, it's all Obozo-Hitlery MSM sycophant hype...

The Saint's picture
The Saint (not verified) wee-weed up Aug 6, 2016 1:06 PM

Only Trump's lower taxes and 'fair trade' instead of 'free trade' plan has any possibility of getting us out of this mess.


tom stamps's picture

They've been shooting both barrels lately @ Trump. He can't overcome all that!

jcdenton's picture

I look at you avatar ..


Then I suggest you are not very well informed ..




You really don't know who these TPTB are, do you?


They are not doing so well, you know ..



Son of Loki's picture
"The Deals Are Collapsing" - Vancouver's Housing Bubble Has Burst


As a new dawn breaks in Metro Vancouver’s real estate market, realty companies and real estate boards are reporting the first anecdotes of deals falling through as foreign buyers forfeited deposits on binding deals rather than pay the new tax. Worse, if only for the unprecedented local housing bubble, and certainly better for potential local homeowners who were locked out from the massively overpriced market, they report evidence of local buyers withdrawing offers in expectation that the market will soften.




Looks like more then Calagry is busting open.

ONEwarrior's picture

These Jobs numbers are there for Hillary and they will not be revised downward next month. The revision, more in line with the truth, will come out after Crooked Killary is elected.

So keep buying the PM dips for stacking purposes.


tom stamps's picture

Yes. They've been revising them down for the last eight months. Maybe so they could add to them these last few months. Make Obama look good

and little easier on Clinton.

lasvegaspersona's picture

Perfect...they got you to say that.

Trust this...most voters do not tune in until after Labor Day. Most voters could not tell you who is running. fewer than 10% could name the VPs on the ticket.

The 2016 election season has not yet started...yet they got you to feel like you are losing already.

!HILLARY has a lot behind her but people don't like her...that is key.

American voters are emotional voters. Screw ups they tolerate. They won't voter for people they don't like. The media can protect her and try to hide her crimes but they can't get folks to like her.

Trump is right...we have to do this ourselves and over come media bias.

Remember, people do not trust the media. They understand that polls are rigged.

All is not lost just because the press is making an issue out of the family of a dead soldier. Folks can see through this even if the press pretends that it is just awful.

Trump does need to overcome his ego and take some advice but he must be more careful that the RNC does not run the show. People, especially Republicans do not care about the RNC.

Remember, a week ago Michael Moore conceeded the race to Trump.

This race has not even started.


ZeInfidel's picture

You ridiculous, cherry-picking fraud.  Hell, you could work for any of the major media outlets with your deceitful, garbage approach.


Here's your headline: "Canada's real estate is 'collapsing at a breath-taking rate'"


Now here's the title of the article you cite: "One province in Canada's real estate market is 'collapsing at a breath-taking rate'


And here is the opening line: "Commercial real estate, particularly office space, in Calgary, Alberta, the epicenter of the Canadian oil bust with 1.2 million people, is collapsing at a breath-taking rate."


So not only do you completely edit the title and change the context, making you a liar and a hack, in an effort to generalize from one province to an entire country, you also cite an article that edits its own headline, making them liars and hacks, in an effort to generalize from one city to an entire province.


Hey bozo, I can do that too: Detroit, Michigan, a city in the United States' economy is collapsing at an alarming rate.

ZeInfidel's picture

Who down-voted this.  The buffoon I was responding to flat out lied and I called him on it.  Shove your down vote up your keister, ladies.

I MISS KUDLOW's picture

Linked in stock collapsed 2/8/16,,,,monday is 8/8/16 the famous 6 month real world prediciton,,,,what can possibly be happanening on Monday?????????????????????????????????????????????/


Just sayin,,,,,something happaneing next week?

The Duke of New York A No.1's picture

There's no pending election in Canada that needs to be stolen.

jewish_master's picture

feeling lucky now i didnt get into that collge i wanted to in canada back in july 2015..... back to jewland!

I M DeMan's picture

That unemployment is crushing Calgary, Halifax and Quebec and Edmonton for sure. As joblessness spreads the housng market looks to follow:


Canada's 'Housing Bubble' Is 'Going To End In Tears': Capital Economics




Some markets are propped up by foreign mney but as the gubmint taxes those, it may sink too like we see Vancouver doing now as commented on zh a few weeks ago..

noideaxxx's picture

wow wow wow, if true

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) noideaxxx Aug 5, 2016 9:57 AM

Someone should be fired for this but luckily they are government employees so back to work.

VinceFostersGhost's picture



I was tipped off yesterday to be ready for this.

Rip van Wrinkle's picture

So you're telling me the job numbers are rigged like the Presidential poll numbers?


Who'd have thunk it??

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Rip van Wrinkle Aug 5, 2016 9:59 AM

It couldn't work out more perfect.  Stock market races ahead on a fake jobs number and all the news stories can run with how great the economy is but the Fed can say "part" (read: all) of the beat was due to seasonal adjustments so they need to wait longer before judging if they can raise another 25 bps...

VinceFostersGhost's picture



Who'd have thunk it??


Oh....you probably can't see my hand in the air.

bob_bichen's picture
bob_bichen (not verified) Rip van Wrinkle Aug 5, 2016 11:46 AM

"It's really tough being a cynic these day because it is so much work to keep up."  ––Lily Tomlin

https://www.youtube.com/watch?v=VDqk8o6y13Y     (one minute of The Firesign Theater)

"...confidence in the system...in easy to swallow propaganda form or NEW, FAST_ACTING thought control.  Have some today!"

Paul John Smith's picture

They lie, because it works, and most Americans are that stupid.

MrSteve's picture

When a basic for any government, like issuing currency, is so corrupted in value as it is here in USA, you know the rest of that government's story is a tissue of lies. The core is rotten!

drstrangelove73's picture

So sad,but it's true.
Also fat and lazy...

LawsofPhysics's picture

It's an "election" year. Just deciding if I should take profits now or wait until the "election"?


Any advice from the ZH gallery?

Cognitive Dissonance's picture


Can't be any more clear than that.

Paul John Smith's picture

I didn't know if they would "pull the plug" or go "crack up boom".

Looks like "crack up boom" with a side of war ...

(world war allows you to print money and not have inflation)

(not good though)


bob_bichen's picture
bob_bichen (not verified) Paul John Smith Aug 5, 2016 11:47 AM



bob_bichen's picture
bob_bichen (not verified) LawsofPhysics Aug 5, 2016 11:49 AM


Drink alcohol.
Watch and Believe Your Television.
Give Generously to You Television Preacher.
Take Your Medication As Directed.
but above all...

GeezerGeek's picture

Only "Drink alcohol" is recommended here on ZH. The rest do not fit with the first. Perhaps you meant "Take your SOMA".

Glasshopper's picture

Algos aren't smart enough to read articles like that

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Glasshopper Aug 5, 2016 9:56 AM

Correction:  Algos aren't programmed to read articles like that

Bill of Rights's picture

We bull shitted some folks...

SomethingSomethingDarkSide's picture

It's Monopoly Money being traded for Candy Land Dollars at this point, take some molly and go to a concert.  It's a much better way of spending money than trying to parse this shit show.

wisehiney's picture

Thanks alot Tyler.

Just when I thought I would get a nice tbond sell off.

You spill the beans.

Rainman's picture

" He did not provide a reason why the government would do that "

   Here's the reason :  Obammie's mouth to Penny Pritzker's ears.

Da chief's picture

Kong has it right.

We are now "scanners" and not "readers".

Headlines get gobbled up  -  no one knows anything anymore as there is so much information to consume.

Rate Hike? Impossible.


back to basics's picture

Everyone knows the numbers are manipulated but no one gives a shit as long as the punchbowl is not taken away. And the REAL numbers suggest the punchbowl will not be taken away this year, if ever. No rate hike despite the "odds of rate hike increase" narrative. ***THAT'S*** precisely why the S&P is hitting new all time highs ignoring this rate increase in September narrative. It's a false narrative, it's all bullshit and Wall Street knows it.

Those who keep going short based on fundamentals are getting their scalps handed to them. That's reality, as much as I hate to admit it. The FED (and all CBs for that matter) has removed ALL RISK. Period. It's practically an one way market, if you can still call this abortion of the FED manipulated creation still a market.


SomethingSomethingDarkSide's picture

I had to read this a few times over because it made me feel sane.