Once again, TrimTabs — the research firm which forever was savaging the BLS for being too rosy — says the BLS is now understating the magnitude of the jobs comeback.
Here’s their argument:
TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy added 280,000 jobs in March. Meanwhile the Bureau of labour Statistics (BLS) reported the U.S. economy added 162,000 jobs. We believe the BLS underestimated March job gains, due to the fact that their survey was only 72% complete when the March results were released. During inflection points in the employment cycle, in this case from job losses to job gains, the BLS frequently underestimates job growth. The BLS will likely revise their employment estimate upward in coming months.
We believe the difference in the two employment estimates lies in the fact that our daily tax deposit based estimate picked up a surge in employment during the last two weeks of March. The BLS survey period covers payroll employment from the 13th of the previous month through the 12th of the current month, while TrimTabs estimate includes the last two weeks of March. That means any acceleration in employment during the last half of the month would not be picked up by the BLS survey. Had we used the same time period as the BLS survey, our results would have yielded an employment estimate of approximately 200,000 new jobs.
When the data is examined in more detail, the two employment estimates basically agree on the number of private sector jobs added. While Trimtabs estimated that approximately 100,000 private sector jobs were added to payrolls in March, the BLS estimated 123,000 private sector jobs were added. Where the two estimates diverged was in the number of census hires. TrimTabs’ estimate of census hires relied on examining hiring trends during the 2000 Census and then extrapolating forward. Using this method, we estimated the Census hired between 150,000 to 200,000 workers in March. That fact probably remains true, except that the bulk of the Census hiring activity occurred during the last half of March, after the cutoff date of the BLS’ survey.
Regardless of the methodology, the over-arching message is clear: Job growth is accelerating. That is good news for an economy that shed an astonishing 8.4 million jobs between January 2008 and February 2010.
A comparison of TrimTabs’ real-time withholding tax based employment results versus the BLS’ preliminary and revised results from January 2009 through March 2010 are summarized in the following table:
Excluding the government sector, employment gains were broad based and occurred in following sectors:
Source: TrimTabs Investment Research – www.trimtabs.com
Several employment related statistics support Trimtabs’ conclusion that the labour market improved rapidly in March:
· Real-Time tax withholding data shows that March wages and salaries grew an adjusted 4.3% y-o-y, the second consecutive month of positive gains.
· The Monster Employment Index edged up 1 point in March.
· The TrimTabs Online Jobs Index gained 5.3% in March, and is up 22.9% year-to-date.
· Weekly unemployment claims declined 6,000 to 439,000 from 445,000 the previous week.
For a complete analysis of the current employment situation and economic conditions, refer to TrimTabs Weekly Macro Analysis published this coming Tuesday, April 6, 2010.
Business Insider Emails & Alerts
Site highlights each day to your inbox.