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Brookings on Job Numbers

Strong Payroll Growth Continues

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.

In my paper “Unseasonal Seasonals?,” I argue that a longer window should be used to estimate seasonal effects. Using a different seasonal filter, known as the 3×9 filter, produces better results and more accurate forecasts. The key difference in the 3×9 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.

I calculate the month-over-month change in total nonfarm payrolls, seasonally adjusted by the 3×9 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 309,000 jobs last month. The Bureau of Labor Statistics reported that the economy gained 295,000 jobs last month. The discrepancies between the two series are explained in my paper.

Thousands of Jobs Added

BLS

Wright

2015-February

295

309

2015-January

239

209

Author

2014-December

329

342

2014-November

423

443

2014-October

221

232

2014-September

250

236

2014-August

213

213

2014-July

249

222

2014-June

286

285

2014-May

236

236

2014-April

330

337

2014-March

225

231

For more recent analysis by Brookings experts on how weather and seasonality have affected the latest jobs numbers, visit our page on adjusting the monthly jobs numbers.

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