Birth death assumptions are becoming unhinged from reality
This article first appeared on SchiffGold.
The analysis below covers the Employment picture released on the first Friday of every month. While most of the attention goes to the Headline Report, it can be helpful to look at the details, revisions, and other reports to get a better gauge of what is really going on.
The jobs report showed a gain of 115k jobs for the month of April. While that beat expectations, it is really important to highlight the Household Report. This data showed a loss of 226k jobs for April which is a massive difference from the Headline Report.
Figure 1: Primary Report vs Household Survey - Monthly
To show the magnitude of this underperformance, consider the chart below. YTD, the Headline Report shows a gain of 304k jobs where the Household Survey shows a loss of 1.37M jobs.
Figure 2: Primary Report vs Household Survey - Annual
The BLS publishes the data behind their Birth/Death assumptions (formation of new business). The data showed that the BLS assumed a gain of 391k jobs for the month of April.
Figure 3: Primary Unadjusted Report With Birth Death Assumptions - Monthly
We are now in the second year of a situation where assumed births is positive while the actual jobs created are negative. This means that BLS continues to assume job growth through business birth while the rest of the economy sheds jobs.
Figure 4: Primary Unadjusted Report With Birth Death Assumptions - Monthly
Unfortunately, despite being highly unreliable, the Headline report is the best data we have for the more recent periods. Furthermore, this is the data the Fed uses to shape its policy. The 115k jobs gained is the third best month since December 2024. Even with the general weakness of a number barely over 100k, the fact that it’s only happened 3 times in 16 months is very concerning. The unemployment rate held steady at 4.3%.
Figure 5: Change by sector
When looking at the last 12-month trend, you can see that every job category was above trend except for Education/Health. As for the trend, 5 of 8 categories are actually negative over the last year.
Figure 6: Current vs TTM
The table below shows a detailed breakdown of the numbers.
Monthly Average Change | Total % Change | ||||||||
|---|---|---|---|---|---|---|---|---|---|
Category | Total Employed | Current Month | 3 Months | 12 Months | 3 years | Current Month | 3 Months | 12 Months | 3 years |
Private Sector | |||||||||
Construction | 8,337 | 17 | 13.7 | 5.7 | 10.3 | 0.2% | 0.5% | 0.8% | 4.5% |
Education Health | 27,886 | 40 | 63.0 | 50.8 | 74.0 | 0.1% | 0.7% | 2.2% | 9.6% |
Financial | 9,104 | -22 | -15.0 | -8.9 | -2.0 | -0.2% | -0.5% | -1.2% | -0.8% |
Information | 2,783 | -2 | -3.0 | -6.8 | -7.0 | -0.1% | -0.3% | -2.9% | -9.0% |
Leisure Hospitality | 17,079 | 70 | 48.0 | 20.0 | 15.2 | 0.4% | 0.8% | 1.4% | 3.2% |
Manufacturing | 12,605 | 7 | 7.3 | -3.8 | -7.3 | 0.1% | 0.2% | -0.4% | -2.1% |
Mining and Logging | 613 | 4 | 4.0 | -0.4 | -0.8 | 0.7% | 2.0% | -0.8% | -4.7% |
Other Services | 6,030 | 3 | -0.7 | 3.0 | 6.0 | 0.0% | 0.0% | 0.6% | 3.6% |
Prof Business | 22,468 | 6 | 18.7 | 1.5 | -10.6 | 0.0% | 0.2% | 0.1% | -1.7% |
Trade Trans Utils | 28,709 | -3 | 30.3 | -4.7 | -3.4 | 0.0% | 0.3% | -0.2% | -0.4% |
Government | |||||||||
Government Federal | 2,677 | 1 | -4.0 | -22.9 | -6.6 | 0.0% | -0.4% | -10.3% | -8.9% |
Government Local | 15,243 | 55 | 28.0 | 12.4 | 19.8 | 0.4% | 0.6% | 1.0% | 4.7% |
Government State | 5,467 | -4 | -2.0 | -4.0 | 5.2 | -0.1% | -0.1% | -0.9% | 3.5% |
Total | |||||||||
All | 159,001 | 172 | 188.3 | 41.9 | 92.9 | 0.1% | 0.4% | 0.3% | 2.1% |
Values in 1,000s of workers. Data as of: May 2026. Total Employed = Entire size of the labor market. | |||||||||
This is the biggest story of the jobs report. After all the revisions, the job picture is significantly bleaker than the data originally showed. Ironically, 2 of the last 3 months were revised higher, but the overall trend has been massive job revisions downward.
Figure 7: Revisions
Over the last twelve months, jobs have been revised down by about 73k per month! Even with the two positive revisions in Jan and March, the negative revision in February keeps the aggregate revisions negative over the 3 month period.
3 Month Compare | 12 Month Compare | 3 Year Compare | |||||||
|---|---|---|---|---|---|---|---|---|---|
Category | Current | As Of Published | Avg Month Diff | Current | As Of Published | Avg Month Diff | Current | As Of Published | Avg Month Diff |
Private Sector | |||||||||
Construction | 3 | 52 | -16.3 | 49 | 124 | -6.2 | 365 | 553 | -5.2 |
Education Health | 100 | 177 | -25.7 | 630 | 708 | -6.5 | 2,733 | 2,642 | 2.5 |
Financial | -21 | -48 | 9.0 | -79 | -22 | -4.8 | -54 | 158 | -5.9 |
Information | -30 | -18 | -4.0 | -80 | -47 | -2.8 | -258 | -63 | -5.4 |
Leisure Hospitality | 43 | 128 | -28.3 | 173 | 285 | -9.3 | 522 | 1,065 | -15.1 |
Manufacturing | 16 | 20 | -1.3 | -64 | -44 | -1.7 | -286 | -36 | -6.9 |
Mining and Logging | 7 | 9 | -0.7 | -13 | -17 | 0.3 | -28 | -27 | 0.0 |
Other Services | 1 | 4 | -1.0 | 40 | 43 | -0.2 | 229 | 232 | -0.1 |
Prof Business | 54 | 15 | 13.0 | -8 | -29 | 1.8 | -375 | 247 | -17.3 |
Trade Trans Utils | 58 | 90 | -10.7 | -71 | 52 | -10.2 | -87 | 499 | -16.3 |
Government | |||||||||
Government Federal | -9 | -26 | 5.7 | -300 | -133 | -13.9 | -228 | -57 | -4.8 |
Government Local | 23 | 69 | -15.3 | 118 | 166 | -4.0 | 702 | 736 | -0.9 |
Government State | -8 | -7 | -0.3 | -51 | 31 | -6.8 | 219 | 279 | -1.7 |
Total | |||||||||
All | 237 | 465 | -76.0 | 344 | 1,117 | -64.4 | 3,454 | 6,228 | -77.1 |
Values in 1,000s of workers. Because this data is focused on revisions, it is as of the month prior: Apr 2026. "Current" shows the change in employment after revisions. "As Of Published" shows change in employment at time of release. "Avg Month Diff" shows the average monthly change from the revisions. | |||||||||
Another level of detail in the Household report shows full-time vs part-time job holders. The data shows full time jobs being lost in April.
Figure 8: Full Time vs Part Time
The chart below shows data going back to 1955.
Figure 9: Historical Labor Market
The labor force participation rate is still well below the highs before the Global Financial Crisis. This month showed it falling to 61.8%, the lowest level since 2021. As recently as November of last year, the participation rate was 62.5%.
Figure 10: Labor Market Distribution
Another job report and another vast set of data values that belies the Headline Report. While the Headline Report is a modestly weak number for an economy the size of the US, the rest of the data points show that the real number is far weaker. The Fed will not be able to ignore this forever.