October Jobs Report: A Blatant Display of BLS Manipulation

The most recent job data has garnered widespread criticism, with even the Biden administration finding little positive to say about it. The headlines are that nonfarm payrolls decreased more than anticipated and unemployment rose to 3.9%. However, a closer look under the hood reveals the report is even worse than it would originally appear.


Firstly, with the topline numbers. The latest employment figures fell below expectations, with only 150,000 jobs added, well short of the projected 180,000. This represents a significant 50% drop from the revised September total of 297,000 and is one of the lowest levels since the economic challenges triggered by the COVID-19 pandemic.


On the topic of revisions, substantial ones have been made to prior job reports. Both the August and September job reports underwent downward alterations, with August showing a decrease of 62,000 jobs (from +227,000 to +165,000) and September's revision amounted to 39,000 jobs (from +336,000 to +297,000). This results in a combined employment figure for August and September that is 101,000 jobs lower than initially reported.


Alarmingly, the Bureau of Labor Statistics (BLS) has downwardly revised eight out of nine previous monthly job reports for 2023. This pattern of revisions, if occurring by chance, would be highly improbable, casting doubt on the initial data's reliability.


Another very interesting adjustment we’ve seen is the Birth-Death Adjustment, reaching 412,000, marked the second-highest in history. This adjustment is grounded in the assumption that business and job creation, affecting non-seasonally adjusted payroll figures, is experiencing an unprecedented surge.


Without this adjustment, the baseline job numbers for October would have been notably lower, possibly even negative. However, this adjustment doesn't align with the actual economic landscape.


To add further evidence of potential manipulation, significant disparity continues to exist between the number of employed workers (per the Household Survey) and the number of jobs (Establishment Survey) as shown below.


Difference between the number of employed workers (per the Household Survey) and the number of jobs (Establishment Survey)


The nature of the jobs added raised concerns. Not only were there not enough jobs, but their quality and characteristics were troubling. Out of the 150,000 jobs in October, over a third (51,000) were in government. Of the remaining 99,000 jobs, a substantial portion (89,000) were in "education and health services," predominantly in low-paying healthcare and social assistance roles (77,200). The remainder amounted to just 10,000 jobs, with declines in higher-paying sectors such as Trade and Transportation (-1,000), Information (-9,000), Financial Activities (-2,000), and a significant drop of 35,000 in Manufacturing jobs.


Lastly, a record number of individuals are taking on multiple jobs. While the U.S. is adding jobs at a steady pace, the number of people finding employment isn't keeping up.


In fact, more people under the current administration are forced to juggle two or more jobs to make ends meet. In October, the number of multiple jobholders, without seasonal adjustment, reached an all-time high of 8.5 million, surging by 396,000 in a single month.


While nonfarm payrolls overall might remain positive, the actual change in monthly employment doesn't align. In October, the number of employed Americans decreased by 348,000, marking the second negative month this year and the seventh since the COVID-19 pandemic. Ironically, there has been only one negative payroll month since then, attributable to the nonfarm payrolls figure being less precise and more susceptible to manipulation.


This all of course paints a clearer picture of the US heading toward a recession, joining Canada and Germany. The inevitable response of the Fed returning to monetary easing, particularly whilst inflation not yet tamed and shares still overvalued, is music to the gold price’s ears.