A worker at Best Buy helps shoppers get carts on Black Friday (photo: Shannon Stapleton/REUTERS)
We might need a jobs recount.
The employment numbers came out on Friday morning for November and they were far lower than people were hoping for. But here’s the problem: The employment picture might not be as disappointing as the number the Department of Labor reported. Why’s that? The Labor Department failed to count just over 350,000 jobs in its final tally. Include those jobs into the mix, and the economy actually added nearly 400,000 jobs in the month of November. So why did November become such a downer? Here’s why:
It all has to do with the retail sector. And the WSJ has a good take on this on their economics blog. Retail was one of the biggest negative surprises in the November jobs report. You would expect stores to have hired big in November, getting ready for the holiday season. And indeed all reports are that Black Friday and Cyber Monday were very strong for retailers. Yet, according to Labor Department’s final numbers, not only did the retail sector not add jobs in November, stores fired workers–28,000 of them. Really?
No, not really. In reality, the retail sector added just over 300,000 new hires in the month of November. But the Labor Department didn’t count those hires. That’s because the Labor Department’s final number of employment is seasonally adjusted. And since the retail sector disproportionately adds more workers this time of the year than the other 10 months, the Labor Department adjusts down the sector’s employment numbers in November and December. So retail employment gets over counted in January and February when hiring is slow, and undercounted in November and December. The reason is to smooth the numbers, but it also distorts, particularly at times like these when the economy is hopefully at an inflection point. The result: In the Labor Department’s final count, 350,000 retail jobs got excluded.
And that may make sense. Many of those jobs are seasonal and temporary. But if the retail sector continues to do well this holiday season, some stores may keep a good number of those employees. If so, November’s disappointing job report might be just be setting the economy up for a surprisingly strong employment number for January.