Posted in: Market News
Published:
December 9, 2019 2:22 PM UTC

Was the November Jobs Report Manipulated?

The November jobs report may have pleased the media and the Wall Street but it wasn't as good as the headline number suggests.

  • Stellar jobs report pushed the Dow higher on Friday.
  • Extremely high discrepancy between the ADP and BLS jobs reports raises the possibility of government manipulation.
  • Part-time jobs are making the headline numbers appear deceptively good.

U.S. jobs growth in November jumped at the fastest pace in ten months and smashed all estimates. The official report from the Bureau of Labor Statistics (BLS) showed that non-farm payrolls increased by 266,000, well above the forecast of 187,000.

BLS jobs report for the month of November. | Source: Tradingeconomics.com

President Trump even boasted about the stellar job numbers on Twitter.

President Trump is happy with the jobs report. | Source: Twitter

Even President Trump’s arch enemy—the mainstream media—bought into the euphoria with the likes of Jim Cramer calling it “the best jobs report of our lives.”

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The BLS report propelled the Dow Jones Industrial Average back above 28,000 for a gain of 1.2%.

Job numbers push the Dow Jones higher on Friday. | Source: Yahoo! Finance

But were the job numbers really that good? I don’t think so; there are a few things the mainstream media and Wall Street seem to be missing about the report.

Huge Discrepancy Between Two Jobs Reports

The ADP Research Institute released its private payrolls numbers about 48 hours before the official BLS report. Usually, there’s a high correlation between the job numbers of both the agencies. For November, there was a discrepancy of 199,000. As per ADP, the U.S. private sector added just 67,000 workers.

ADP U.S. jobs report isn’t spectacular. | Source: ADP Employment Report

The divergence between the two job reports is one of the highest ever and casts a shadow of doubt on the BLS numbers. As per ADP, the goods-producing sector saw a decline of 18,000 jobs whereas the BLS report showed a net gain of 54,000 jobs in this category.

The primary reason behind this discrepancy was the 41,000 “new jobs” created in the auto industry after striking GM workers returned to work. Since all these employees already had jobs and would have gone back to work anyway, counting their return as new jobs is disingenuous on BLS’ part.

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The Federal government has long had a reputation of reporting fake inflation and unemployment numbers to maintain the illusion of a strong economy. Even Trump himself used to claim that the job numbers were fake before he was elected.

Given the history of government manipulation, there’s a good chance that the huge discrepancy between the two job numbers was a result of some chicanery.

No One is Talking About Part-Time Jobs

Another thing that the mainstream media have not taken into consideration is that a lot of these new jobs are likely low-paying, part-time jobs. November is a seasonally strong month for employment as companies go on a hiring spree to prepare for the festive season. Many of these new employees are let go after the Christmas rush. These temporary jobs are not indicative of a strong economy.

Also, since many of the new jobs are part-time, there’s a good chance that a lot of people took two or even three jobs. A single person taking three part-time jobs is counted as three new jobs in the BLS numbers and this makes the headline number appear better than it actually is.

High Frequency Trading (HFT) loved the BLS numbers and caused the markets to move higher on Friday. However, the economy is probably not as strong as the jobs report suggests.

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This article was edited by Sam Bourgi.

Last modified: January 22, 2020 11:41 PM UTC

Ayush Singh @TraderBased

Ayush is a financial blogger and a swing trader. He has roughly four years of experience covering the U.S. stock market and has consistently featured on Tip Ranks' list of top performing bloggers. He is based out of Indore, India and is also managing the portfolios of several local retail clients. You can email him on Ayush.Singh93@outlook.com

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