Did seasonal hiring inflate the strong jobs report?
Unemployment figures are adjusted for seasonal hiring, but high numbers of courriers and messengers (a result of increased online shopping) may have had a bigger effect on the numbers.
The BLS noted something a little unusual in the jobs report data from yesterday, and it got me thinking about how seasonal employment patterns are evolving over time.
There was a 42,000 spike in the number of couriers/messengers last month, and the Bureau pointed out “that seasonal hiring was particularly strong in December. This may reflect increased online purchasing during the holiday season.”
Now, the data come adjusted for seasonal effects, meaning that since we expect more delivery people to be hired in the December, the Bureau subtracts what we’d expect in terms of seasonal hires, leaving any gains (or losses) above (or below) that to counted as net new jobs.
But what if a lot more people start shopping online instead of in stores? In that case, you’d want to crank up the seasonal factor for messengers and probably take down the one for retailers (i.e., since retailers are making fewer seasonal hires under this scenario, you’d want to be careful not to over-adjust by subtracting too many December jobs from the brick-and-mortar establishments).
This is called “moving seasonality”, reflecting the reality that seasonal patterns that affect different industries can change significantly over time. Now, the BLS seasonal adjuster does allow for moving seasonality, but it hasn’t picked it up yet for the delivery persons’ sector.
A number of time-series analysts like to use STAMP (structural time-series modeling…look it up if you’re interested) to capture these types of movements in the seasonals, and in fact, that method applied to the messengers series works well.
The figure below shows a) the series as published by the BLS yesterday and b) adjusted for the moving seasonality—i.e., the increased December hiring by all those gift-bearing delivery folks that we’re all so happy to see!
As you can see, the BLS seasonally adjusted series has developed a bad case of the spikes over the past few Decembers. The alternative adjustment which allows for faster moving seasonality takes away most of those spikes.
Bottom line #1: a more accurate read on yesterday’s jobs report would subtract about 30K from the 200K topline number.
Bottom line #2: I wonder what’s going on in other sectors? Are they now over-adjusting in retail?
Bottom line #3: If you’ve read this far, I salute you, fellow nerd!
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