The Job Market’s Seasonal Affective Disorder

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By all means, celebrate the June employment report. Just don’t consider it the last word on what is happening with the job market.

The Labor Department on Friday reported that the economy added 850,000 jobs last month, more than the 706,000 economists expected and a welcome step up from May’s addition of 583,000 jobs and April’s 269,000.

There were big gains in a number of services categories, such as restaurants and retailers—a reflection of how, with the easing of the Covid-19 crisis, the job market is healing. The strength of the report also suggests worries about the availability of workers, while valid, may have been somewhat overstated.

But if drawing conclusions from one month’s set of numbers is always dangerous, it is doubly so now. The pandemic has thrown many of the old patterns of hiring out of kilter, and the resulting volatility is getting magnified by the adjustments the Labor Department makes to account for seasonal swings in hiring.

Take jobs in education as an example. In a usual year these register a big decline in June, as schools let out for summer. The Labor Department’s seasonal adjustment process anticipates this decline, bumping up the June figures to get a better sense of where the job market is trending. Then in the fall, as schools go back in session, it adjusts the figures down.

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