Like magic, most of the new jobs announced in the monthly reports disappeared. Instead of a net gain of almost half a million, BLS says the net gain was 19,000. That's not a type--nineteen thousand. Somewhere around 4% of the previously announced total.
Possibly worse is that the total number of private sector firms dwindled by some 8,000 in the third quarter of 2006--8,000 more businesses dies than were born.
An excerpt of relevant material from the quarterly summary:
Private Sector Establishment-Level Gross Job Gains and Job Losses
Opening and expanding private sector business establishments gained 7.4 million jobs in the third quarter of 2006, a decrease of 397,000 from the previous quarter. Over the third quarter, expanding establishments added 6.0 million jobs, while opening establishments added 1.4 million jobs.
Gross job losses totaled 7.3 million, an increase of 50,000 from the previous quarter. During the quarter, contracting establishments lost 6.0 million jobs, while closing establishments lost 1.3 million jobs. (See tables A, 1, and 3.)
The difference between the number of gross jobs gained and the number of gross jobs lost yielded a net change of 19,000 jobs in the private sector for third quarter 2006.
From June 2006 to September 2006, gross job gains represented 6.5 percent of private sector employment, while gross job losses represented 6.5 percent of private sector employment. (See tables A and 2.) These gross job gain and loss statistics demonstrate that a sizable number of jobs appear and disappear in the relatively short time frame of one quarter.
Number of Establishments Gaining and Losing Employment
Another way to look at the dynamics of business activities is to monitor the number and proportion of business units that are growing and declining. The third quarter of 2006 represented the first quarter where the number of contracting establishments exceeded the number of expanding establishments since the second quarter of 2003. Out of 6.9 million active private-sector establishments, a total of 1,865,000 establishments gained jobs from June 2006 to September 2006. (See table C.) Of these, 1,524,000 were expanding establishments and 341,000 were opening establishments. During the quarter, 1,542,000 establishments contracted and 349,000 establishments closed, resulting in 1,891,000 establishments losing jobs.
Overall, the number of active private sector establishments decreased by 8,000 during the quarter. This change is the difference between the number of opening establishments and the number of closing establishments.
What in the world could cause such a discrepancy between the monthly and quarterly figures? The report in the NY Times notes:
The figures do not cover exactly the same things, as a small proportion of employers — notably railroads and religious organizations — are not covered by unemployment insurance. And Kirk Mueller, a branch chief in the section of the bureau that deals with current employment statistics, said differing seasonal adjustment factors could affect the results.
Nonetheless, the Times piece also states that "Eventually, the monthly numbers will be revised to reflect the results of the quarterly survey." In other words, the quarterly figures will be treated as the final figures.
Nineteen thousand jobs over three months. Around 4% of the previously announced net gain.
Eight thousand more private sector employers going out of business than entering business.
Anyone want to reconsider the state of the economy?
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