Monday, May 9, 2011

Mixed Signals on Jobs

Friday brought one of the oddest jobs reports we've seen in a long time. The headline news was disappointing: The official unemployment rate rose from 8.8 percent to 9.0 percent. But the sub-headline news was very positive, with 254,000 jobs being added in April, including 268,000 new private-sector jobs. And even beneath that, there was further good news, as the number of jobs added in March was revised upward from 216,000 to 221,000.

So why did the unemployment rate go up? The Bureau of Labor Statistics actually derives its data from two different sources: They conduct a household survey to determine the unemployment rate, and a survey of employers to find out how many jobs have been added. The two numbers tend to track each other pretty closely, although throughout the recovery, the household survey has been showing a slightly rosier picture than the employer survey.

What happened in the last report is that the two numbers have merged. The employer report was strong, but the household report was static, and with the natural growth of the employment force, the unemployment rate rose. David Leonhardt of the New York Times has a nice graph and explanation here.

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