Non Farm Payrolls Suck

Biggest revision in history. 

Virus Vs. NFP

The virus is correlated to Nonfarm Payrolls. 

Household employment Vs. Non-farm Payrolls

The non-farm payrolls were better than expected in June 2021. However, something that the media didn't pick up is that household employment levels fell in June 2021.

It is important to watch the household employment level vs. non-farm payrolls. Household employment level surveys actually include small businesses unlike non-farm payrolls. Household employment is a leading indicator for non-farm payrolls as small businesses adapt much faster than large businesses. 

Net Turnover Vs. Change in Non-Farm Payrolls Vs. Change in Unemployment Rate

The non-farm payroll number is a leading indicator for the unemployment rate. Check the economic tracker to predict the NFP numbers.

Watch the household employment level vs. non-farm payrolls. Household employment level surveys actually include small businesses unlike non-farm payrolls. Household employment is a leading indicator as small businesses adapt much faster than large businesses.

NFP revisions.

There is another way to calculate the non-farm payroll numbers and this is called the JOLTS (Job Openings and Labor Turnover) data. When you subtract hires and separations from each other, you get the change in non-farm payroll numbers.

Change in NFP = Hires - Separations.

JOLTS data is more accurate than the NFP data (which gets revised a lot). You can use the JOLTS data to predict the NFP data and with NFP data, you can predict the trend of the unemployment rate.

Job postings give an idea of the trend.

   

Daily Linkup data.

The Beveridge Curve states that the unemployment rate will rise when job vacancies drop below 5%.

 

Leading indicator for U.S. unemployment can be derived from the states data.

Distribution between native and foreign workers.

A good way to forecast the unemployment rate is to look at the S&P Global U.S. services PMI employment, reported via the flash PMI.

 

Employment PMI and unemployment rate are correlated.

True rate of unemployment.

Job gap. The US labor market has reached a critical threshold: The jobs-workers gap has turned negative, signalling that the economy has reached the flat side of the Beveridge curve. A further decline in job openings could push it into recession.