All over the 24-hour news networks, print, and internet media, the lead is the new jobless rate:
How we got to that rate isn’t discussed. Here is the report issued by the Labor Department yesterday that talks about 873,000 jobs being added. That number is from the Household Survey (HS), rather than the Establishment Survey (ES) that calculates total nonfarm payroll. The HS often shows a higher number of jobs gains than the ES does, but the HS is where we get our Unemployment Rate from, even though the ES has been historically more stably accurate.
As one would expect the HS is conducted among households and the ES is conducted among businesses. The ES’s data comes from 140,000 businesses surveyed over the month. That is considerably more than the number of households the HS surveys (60,000), which is not to imply that it is a more accurate survey in a given month, just a different way to look at employment rates.
Every now and then, the HS provides a number that goes against the norm. September’s number seems to have done that. Next month, when the numbers are released, we should expect the survey to reveal a correction to this month’s number. If it doesn’t, then the economy is growing much faster than it has been in recent months, even faster than any month during President Bush’s, President Clinton’s or President H.W. Bush’s terms in office, or someone is cooking the books.
The ES shows that in September we added 114,000 jobs, which doesn’t keep up with population growth, as that requires growth of 125,000.
- August – +142,000
- July – +181,000
- June – +45,000
- May – +87,000
- April – +68,000
- March – 173,000
- February – 259,000
- January – 275,000
We have averaged job growth around 149,000 per month, which is an encouraging sign, but not enough to be an indicator of strong growth, like HS’s 873,000 figure, which is why I fully expect to see a correction next month. Adding to that feeling, is the Labor Department’s latest release adjusting down the Household Survey to 294,000.
I hope the economy is getting better and putting more people back to work, but I’m not so naive to think that a survey of one month, one that goes against every month for the past 3 decades, is an indication of that. However, that is what many in the media want you to believe and they won’t tell you the rest of the story. This will probably be the last jobs numbers release that anyone pays attention to before the election, so it is important that people know what these numbers indicate, where they came from, and what is likely to happen in the future.