The explosive employment report
Date posted: November 2, 2012
The recently released national jobs report has created a stir. It showed more than 800,000 jobs created in September and a drop in the unemployment rate from 8.1 percent to 7.8 percent. But some people have cried foul, wondering if the numbers were too good to be true. N.C. State University economist Mike Walden says the report came as a surprise.
“I think you have to understand how this particular job report is done. There are actually two, and I’ll get to that in a moment. This is a jobs report where the surveyors call people on the phone. Most of the people are surveyed are called on the phone. It’s a very, very small sample nationwide. And they essentially ask them if they are working, if they’re not working, et cetera.
“They rely on those answers given by the people to record how many new jobs there are. We did see a big increase — … 800,000. That was much bigger than the other jobs survey, which is actually done by looking at employment reports at businesses, so you have actually hard data there. Also, that survey is much, much broader.
“So the survey from which the unemployment rate is calculated … showing the 800,000 increase, that is a survey that typically is very volatile. In fact, for the previous two months we’ve actually seen a decline in employment by that survey and …, if you average the last three months including the 800,000, it gives you an average monthly number that’s very close to the employment survey where the government actually looks at hard data from businesses.
“So, I don’t think there was anything fishy about these numbers. I think it was simply a matter that this is a survey where the numbers can bounce around a lot. And I think also it tells us we should look up long-term trends rather than any single month.”
Category: Economic Perspective