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Brookings on Job Numbers

Alternative seasonal adjustments show jobs news even better than BLS reports

Each month, many thousands of workers across the U.S. lose their jobs, while others find themselves newly employed. The net number of jobs created or lost in all this activity is an important indicator of the nation’s economic health. But the raw number of jobs created or lost from one month to the next doesn’t say much about the economy. Rather, many of these month-to-month changes are the result of predictable seasonal fluctuations. For example, the fact that the last ten Januarys witnessed the economy shedding over 2.5 million jobs is simply retailers slowing down after the holidays and says nothing about broader economic performance.

This year’s monthly job gains and losses can indicate how the economy is doing once they are corrected to account for the pattern we already expect in a process called seasonal adjustment. 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. I found that using a different seasonal filter, known as the 3×9 filter, produces better results and more accurate forecasts by emphasizing more years of data. The 3×9 filter spreads weight over the most recent six years in estimating seasonal patterns, which makes them 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 296,000 jobs last month. The Bureau of Labor Statistics reported that the economy gained 280,000 jobs last month. The discrepancies between the two series are explained in my paper.

Thousands of Jobs Added

BLS

Wright

2015-May

280

296

2015-April

221

Author

220

2015-March

119

97

2015-February

266

266

2015-January

201

188

2014-December

329

332

2014-November

423

451

2014-October

221

237

2014-September

250

232

2014-August

213

217

2014-July

249

217

2014-June

286

293

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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