Why the US employment situation matters more than any other indicator...

Once a month on the first Friday, the US Bureau of Labor Statistics releases the "Unemployment Situation" for the previous month.  The data include:

  • Total change in employment, with breakdown by sectors.  The "Non-farm Payrolls" number is the headline number.
  • A survey of households to estimate the "Unemployment Rate"
  • Calculations of: average hourly wages, length of the work week and aggregate hours worked.

The estimates are from perfect.  For example, small businesses account for the majority of new hires, but Joe's Auto Repair is ill equipped to update the BLS, compared to, for example, General Motors.  The unemployment rate can swing wildly based on weather, as we saw last month.  Further, surveyed people are only counted as unemployed if jobless but actively looking for work.  "Discouraged" workers in the current environment could account for a "true" jobless rate of around 15%.

Read the entire commentary here.