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Economy Added 189,000 Jobs According to Alternative Seasonal Adjustments

There are massive seasonal patterns in employment data. For example, in July, it is typical for the U.S. economy to lose over a million jobs. Adjusting for this normal seasonal variation is essential to interpreting month-to-month changes in employment. The approach for this seasonal adjustment that is presently used by the Bureau of Labor Statistics (BLS) puts very heavy weight on the current and last two years of data in assessing what are the typical patterns for each month.

Jonathan Wright of Johns Hopkins University argues in “Unseasonal Seasonals?” that a longer window should be used to estimate seasonal effects. He finds that using a different seasonal filter, known as the 3x9 filter, produces better results and more accurate forecasts. The key difference in the 3x9 filter is that it spreads weight over the most recent six years in estimating seasonal patterns. This makes the seasonal patterns more stable over time than in the current BLS seasonal adjustment method.

We calculate the month-over-month change in total nonfarm payrolls, seasonally adjusted by the 3x9 filter, for the most recent month. The corresponding data as published by the BLS are shown for comparison purposes. According to the alternative seasonal adjustments, the economy gained 189 thousand jobs last month. The Bureau of Labor Statistics reported that the economy gained 192 thousand jobs last month. The discrepancies between the two series are explained in Dr. Wright's BPEA paper.

Thousands of Jobs Added

BLS

Wright

2013-April

203

220

2013-May

199

180

2013-June

201

183

2013-July

149

138

2013-August

202

210

2013-September

164

173

2013-October

237

221

2013-November

274

288

2013-December

84

93

2014-January

144

119

2014-February

197

230

2014-March

192

189

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