More Confusing Labor Market Reports

In a recent Policy Brief we described the lack of consistency and need for frequent revisions to regional employment data. These problems make it difficult, on occasion, to understand or ferret out what monthly data actually mean. And right on cue last week’s national labor market and jobs reports brought still more confusion. Payroll employment was up by 244,000 but the unemployment rate rose from 8.8 to 9.0 percent. How does that happen?

The payroll numbers are based on a survey for establishments to ascertain how many people are on the payrolls of the nation’s businesses, governments and non-profits. The unemployment rate is taken from the household survey that asks if people are working or looking for work. In April, the household survey showed 190,000 fewer people reporting they were working than in March along with another 15,000 more looking for work but not finding it, bringing the total increase in the number out of work and looking for work to 205,000.

So what are we to think when the two surveys produce such diametrically opposite results? Unfortunately, these anomalies are part of the inexact science that is measurement of economic indicators covering such vast numbers across an enormous landmass.