A Slight Adjustment

” There are lies, there are damn lies, and there are statistics ” – Mark Twain

“Statistics are like bikinis – what they reveal is suggestive, but what they conceal is vital.”  – author unknown

Yesterday was the release of both the Canadian and the US employment reports. Now, be warned, if you don’t want to see bad words – best not read any further.

For years there have been issues with how unemployment is reported on both sides of the border. Some people will claim Canada has a better handle on revisions than the US does, but statistically that is not so. Yes, Canada’s gross number revision is lower, but Canada is about 12% of the US population, so it damn well better be. But I am not going to talk about the revision to the employment report, but the actual report itself. I don’t think a lot of people really understand how the employment report in Canada is reported. Since the employment report moves markets, lets make sure we all know what goes into it.

Now, when the report comes out every month, we always hear the term ” seasonally adjusted”, yet no one ever knows what the fuck that actually means. The point of the seasonal adjustment is meant to smooth out the peaks and valleys. Not many Canadians buy air conditioners in January or snow shovels in July, so the adjustment is to try and smooth data. Typically the Spring time has a lot of home sales for the Spring market, so there could be more employment during those months related to home sales that wouldn’t exist in September. The seasonal adjustment has been around in government reports for a century. A lot of it dates back to when a lot of the economy was dependent on farming. Since farmers needed to hire workers for the planting and the harvest, the government would adjust the employment numbers to reflect that. So little of the economy is farming related these days, that I think you could argue it is time for the seasonal adjustment to go the way of the Commodore 64. I would argue the seasonal adjustment has outlived its usefulness with the advances in technology and the ability to report things better. Back in the 1930’s when the West had to put their numbers onto a piece of paper and send it across the land by stagecoach, adjustments made sense. It todays up to the minute world we live in – do we really need an adjustment for seasonality?

There is a reason I hate seasonality, and it is because it is to easy to manipulate. The data crunchers can change things, or cover up trends by simply playing around with the seasonal adjustment. Now, before everyone calls me a bunch of names – I didn’t say they DID, I simply said they COULD. In the world we live in now, you don’t have to have an actual conflict, you just have to prove a conflict could exist for the data to be called into question. Say for example, I am a high ranking government official, and my spouse happens to be awarded a large government contract from the division I oversee. Maybe my spouse was the awarded the contract on their own merit, or maybe, just maybe…..well, you get the idea. The perception of a conflict existing is just as bad as the actual conflict itself.

However, let’s get back to yesterday’s jobs numbers. As we all know, the headline number came out and blew the fucking doors off: 76,000 jobs added in January, with the unemployment rate ticking down to 6.60% in Canada. Sounds fucking amazing, right? Especially on the heels of a blow the doors of December jobs report ( released in early January). The December and January back to back numbers are some of the best, if not THE best I have ever seen for Canada in December and January. I am sure the fact that there is a Liberal leadership race and a 96.2% chance of an election coming up at the same time we have back to back blowout jobs numbers is nothing more than a coincidence……

But, here is why my blood pressure is up……Those numbers were the smoothed out, peaks and valleys removed, look good ‘ seasonally adjusted’ numbers. Now let’s look at the non-fucked with numbers? Here we go.

In January 2025, the non adjusted job number was at MINUS 173,500!!! Holy shit!! So, just so we are clear, the Canadian economy ACTUALLY LOST 173,500 jobs in January 2025, but somehow Stats Can ‘seasonally adjusted ‘ the number to positive 76,000. Now, just so we are all on the same page, that is a difference of 249,500. We may as well change the name from Statistics Canada to Guessing Canada. I am pretty certain throwing a dart at a dart board will actually yield a slightly less volatile result than the actual numbers.

So, 173,500 Canadians lost their job in January 2025, but somehow the employment report showed job gains. I wonder if banks will lend money to someone who technically doesn’t have a job, but we can just say that if we seasonally adjust – then they are employed. Why not, it the government can bullshit, why can’t we? Can we start seasonally adjusting T4 slips? I know the T4 slip says the client made $102,000.00 in 2024, but if we seasonally adjust the income, he actually made $148,500.00 since the one week in May he worked 30 hours of overtime. Why not?

It actually gets even worse when you look at the seasonal adjustments for December and January combined. In December of 2024, the difference between non adjusted ( raw data ) and the smoothed out seasonal adjustment was another 70,000 or so jobs.

Since markets move on this type of shit, it is beyond possible that interest rates, house prices, bonds, etc. are moving on data that is not really representative of the actual landscape. Look around – people are fucked, and it is only getting worse, yet somehow Canada has put in back to back blowout employment reports? Come on, people aren’t that stupid are they?

I am a naturally suspicious person by nature, but I always start to wonder about the folks that move these numbers around. Do they benefit from making things look potentially better, or potentially worse than they actually are? Maybe, maybe not. In the last 60 days in Canada there are actually 275,000ish LESS JOBS than reported. Less jobs. Less paychecks. No wonder the previous Finance Minister called it a Vibesession…… People are losing their jobs all over the place, at the same time GDP hit stall speed in 2024, all while the cost of living is rising, and the ever present threat of US tariffs linger over the country.

You can’t seasonally adjust forever, and at some point someone is going to call bullshit, and the rug will get pulled. I am certain that the data for February will also look great – seeing as what is going on politically right now. A country won’t elect someone, or a party if unemployment is up, right? Well, they will if they don’t know unemployment is up.

With 2025 already seeing massive volatility in stocks, yields, interest rates and currencies, you will need to make adjustments to your business almost daily to keep on top of things. Those that adjust will make it through 2025 quite well, whereas those that cannot, or will not adjust, may find them selves seasonally adjusted out of the industry.