What the Monthly Jobs Report Means for You
The BLS’ monthly job report is an important metric for the economy. On the day of its release, the stock market responds—and not always in the direction you’d think. When inflation is high, a strong jobs report is typically bad news for the equity market. This is because a report from the BLS showing that all sectors are steadily adding jobs suggests to the Federal Reserve that the economy (and inflation) are not slowing down. When the Fed raises the federal funds rate, borrowing money for businesses and consumers gets more expensive. A poor jobs report, on the other hand, could lead the Fed to cut rates in order to boost the economy.
The Monthly Jobs Report Explained
The Bureau of Labor Statistics surveys 144,000 non-farm businesses and agencies on the number of jobs, the wages paid, and the hours worked. The jobs report will tell you which industries are adding jobs, whether American workers are working longer hours, and how fast salaries are increasing. The jobs report also provides the unemployment rate. To get the number of unemployed individuals, the BLS must undertake a separate survey of households instead of businesses. This household report also includes workers’ age, gender, and race/ethnicity. The household survey has a more expansive scope than the establishment survey. It includes the self-employed, unpaid family workers, agricultural workers, and private household workers. They are excluded from the establishment survey. The household survey is not as accurate as the business establishment report, though. This is because it has a smaller sample size. That’s why employment numbers are taken from the establishment survey. So the current unemployment statistics often show a different trend than the jobs report.
Other Jobs Reports
There are two other jobs reports. The monthly ADP National Employment Report is released on the Wednesday before the Employment Situation Report. It’s produced by the ADP Research Institute, SM, and Moody’s Analytics. It uses business payroll data to report on the number of jobs added in the private sector. It excludes farming, as does the BLS report. More importantly, though, it also excludes government jobs, which are included in the BLS report. For that reason, it’s considered incomplete. The ADP report gives some analysts an earlier view of what might happen in the Friday report. ADP is quick to say it’s not intended to be predictive. Like the BLS report, it’s revised as more data comes in later in the month. These revised numbers are closely correlated with the revised BLS jobs report. The Department of Labor also releases a weekly jobless claims report. This measures the claims for initial unemployment benefits reported by each state every week. It also says how many of the unemployed are still receiving benefits. This report gives an indication of trends and indicates whether there are more or less unemployed than the week before. The main value of this report is that it is weekly, which gives some idea of trends between the monthly jobs reports. However, the weekly report is too volatile to be a reliable method of predicting monthly job gains and losses.
