"Signs of Improvement"?

by the Sandwichman

Parse this:

NEW YORK (CNNMoney.com) -- The pace of U.S. job losses -- while still fairly strong -- may be abating, according to a couple of reports released Wednesday.

Automatic Data Processing, a payroll-processing firm, said private-sector employers cut 532,000 jobs in May, a 2.4% improvement from the revised 545,000 drop in April.

Economists surveyed by Briefing.com expected a more modest loss of 525,000 jobs last month. ADP originally reported a loss of 491,000 private-sector jobs in April.

First, a cut of 532,000 jobs is not an "improvement." Second, even the "abating pace" is based on comparing a revised April figure with a preliminary May one. The revised April figure was 11% lower than the preliminary figure, in itself not an improvement. The April revision was more than four times as large as the difference between the (revised) April result and the (preliminary) May result. And, of course, the May loss came out of an already reduced private employment total, so the percentage by which the "pace abated" (a derivative of a derivative of a derivative) was less than 2%, not the reported 2.4%.

Another consideration that the data don't show is that layoffs typically proceed in reverse order of seniority, competence, specialization and/or (more cynically) political favor. So a half a million workers let go in May can be assumed to be, on average, more entrenched and more vital to the operations of a firm than a half-million laid off in April. This is a qualitative difference that could easily swamp the (minuscule and questionably computed) reported quantitative change.