Census may have dragged down hiring in private sector in May

Predictions that hiring by the Census Bureau would artificially boost May jobs numbers turned out to be wrong; when the numbers came out last week, they were horrible — at least at first glance.

But according to an analysis by JPMorgan Chase, public-sector hiring may actually have had the opposite effect to the one predicted, artificially depressing the numbers by crowding out private-sector hiring. So there may be reason for optimism.

This year’s census is unusual: It’s the only time in six censuses that private-sector payrolls actually increased during the month when Census hiring was at its peak, says the research note, written by Michael Feroli.

The Census hired 411,000 temporary workers in May, helping the unemployment rate drop from 9.9 percent to 9.7. But the report was widely considered a disappointment because private firms only hired 41,000 workers. Private forecasts had anticipated more than three times that number.

Over the last 50 years, private-sector employment declined in the month when Census hiring was at its greatest, according to the research note. It predicts that hiring in June will make up for the shortfall, and the economy could see 150,000 private-sector jobs added to the rolls.

Feroli acknowledges it could be a coincidence that private-sector hiring has fallen at times of peak Census hiring. After all, why would a company losing a prospective employee to the Census not hire another of the nation’s 15 million unemployed workers?

One reason to believe it’s not a coincidence, however, is that the Census hires part-time workers, a smaller subset of the unemployed population that consists of around 2 million people. Feroli writes that it can be tougher for the Abercrombie and Fitch at the local mall, for example, to replace a college student who goes to work for the Census with an unemployed auto worker, who may have little interest in part-time work.

In addition, the impact of the Census delays the ability of businesses to hire workers, which could have a large effect on the monthly employment number, according to Feroli.