If You Look At It This Way, The Jobs Report Totally Crushed Expectations

US companies added 214,000 payroll in October.

This was a bit lighter than the 235,000 expected by economists.

However, keep in mind that the 214,000 is the Bureau of Labour Statistics’ seasonally adjusted number. In other words, it is adjusted for distorting factors like weather, holidays, the opening and closing of schools, and the births and deaths of businesses.

It’s this month’s seasonal adjustments that Pantheon Macroeconomics’s Ian Shepherdson has problems with. From a note to clients:

…The payroll shortfall in October is all about the seasonals and birth/death model, both of which were much tougher than in Oct. last year, for no apparent reason. The seasonal subtracted 137K more from private jobs than a year ago, and the birth/death hit was 22K. Had they been unchanged, the Oct number would have been 373K. We can’t make any sense of the seasonal/birth-death swing, and it will reverse in due course. In the meantime, the numbers as published are OK, with no standout weaknesses.

373,000 would have been considered a blowout number.

Shepherdson also notes that there was a net 31,000 upward revision to the previous two jobs reports, so you could actually argue this month’s number was closer to 245,000.

These adjustments and revisions are just a few of the many issues associated with the jobs report. So, it’s probably best not to make policy or investment decisions based on the outcomes of one report.

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