Monday, July 13, 2015
Misleading Employment Situation Report
Here's the quote from the first line of Employment Situation Report for June 2015. "Total nonfarm payroll employment increased by 223,000 in June, and the unemployment rate declined to 5.3 percent,..."
These two pieces of data are not even from the same surveys.
The problem here is that the Unemployment rate is taken from the Household Survey(CPS), not the Payroll report(CES). For the month of June, total employment(CPS) declined by 56,000, yet unemployment edges down by 0.2%. (More than 100% in the decline in the Unemployment rate for June is the result of people leaving the labor force.)
Employment for bachelors degreed and above (25 and older), employment increased by 30,000, curiously that unemployment rate also declined by 0.2%.
Also, when we read the monthly Employment Situation Report, employment by Industry is taken from the Payroll report (CES) and the April and May reports were revised downward by 60,000. So this seemingly straight forward survey was off by 12% in the previous reports, and again, has nothing to do with the unemployment rate.
If you ever want to stump an idiot who tells you how great the economy is doing and points to the Unemployment rate as proof, ask them, "How many jobs were created that month, and what that number has to do with the Unemployment rate?"