August Unemployment Down

Employment-1939-2015_AugThe BLS issued their “preliminary estimates” for the employment situation for the month of August 2015. The Commissioner’s report regarding the Seasonally Adjusted numbers says, “Nonfarm payroll employment increased by 173,000 in August, and the unemployment rate edged down to 5.1 percent. Employment rose in health care and social assistance and in financial activities, while manufacturing and mining employment declined.”

The full report of unadjusted numbers states that there were 142.126 Million jobs in August compared to 141.794 million jobs in July and 142.868 million jobs in June.

See Current Employment Commentary for more information.

Unemployment Rate Chart - August 2015The U.S. Bureau of Labor Statistics (BLS) also released the newest unemployment data for August 2015 today. According to the BLS, the current “Seasonally Adjusted” Unemployment Rate for July is 5.1%  down from July’s 5.3%. The BLS reported the “Unadjusted” Unemployment Rate is 5.2% which is lower than July’s 5.6% . See Current Unemployment Chart for more information.

emp vs unemp 2010- Aug 2015In our chart of employment vs. unemployment we compare them and although you would expect that employment and unemployment are simply the inverse of each other (i.e flip one over and you have the other) actually there are several anomalies in the data. Because the U.S. Bureau of Labor Statistics (BLS) uses two separate surveys to calculate the data it helps us see when some data doesn’t quite fit”. See Current Employment vs. Unemployment Chart.

U3 vs. U6 Unemployment

U3 compared to U6 UnemploymentWhen measuring unemployment, the Bureau of Labor Statistics (BLS) uses six different measurements i.e. U-1 through U-6. This chart compares the broadest U-6 rate with the commonly used U-3 unemployment rate. The gap between the two (i.e. U-3 and U-6) increases as the employment situation worsens and decreases as we near “full employment”. For instance, in October 2000 when unemployment was at the lowest levels on this chart the difference was only 2.7%. At that point, U-3 was 3.6% and U-6 was 6.3%. However, in January 2010, at the peak of unemployment U-3 was at 10.6% but U-6 shot all the way up to 18% for a difference of 7.4%. More

Historical Employment Levels Compared to Recessions

Employment-1939-2015_Aug

Generally, recessions correspond pretty well to declines in employment (i.e. increased Unemployment). This is especially true since unemployment is one of the major factors NBER uses to determine whether there is an official recession. This chart shows the actual number of jobs in addition to showing recessions shaded blue as per the official description of a “recession” by the National Bureau of Economic Research (NBER).See Employment During Recessions for more information.

 

US_Misery_Index_May_2015Created by economist Arthur Okun, the misery index combines two simple data sets that determine how difficult life is for the average citizen but during the 1960’s when it was created the index was actually at historically low levels.

The two factors it uses are inflation and unemployment. High levels of price inflation (rapidly rising prices) will cause households to have difficulty affording the basic necessities while high unemployment will leave a high percentage of households without any income at all. High combined levels will cause havoc throughout the economy and a high level of distress, discomfort and political unrest. See Misery Index.

Seasonal Adjusting

Adj vs unadj unemployment rate Aug 2015 Seasonal adjustment is a statistical technique which is supposed to mitigate the influences of weather, holidays, the opening and closing of schools, and other recurring seasonal events from economic data. This should allow statisticians to spot nonseasonal movements in the data. So theoretically removing the seasonal fluctuations makes the data easier to compare from month to month and in practice it looks somewhat like a moving average smoothing out the peaks and valleys. So let’s look at how seasonally adjusted data compares to unadjusted unemployment data on a chart.

What is the “Real” Unemployment Rate?

BLS vs Gallup Unemployment Numbers Often there is mistrust of government numbers so the Gallup survey people began doing their own survey on unemployment rates back in 2010, in an effort to determine the True Unemployment Rate. We compare their results with the results the BLS publishes in this chart. Thus we see that the Gallup numbers are usually higher than the BLS numbers with the BLS numbers consistently presenting a rosier picture. See: BLS vs. Gallup Unemployment Rates. See Also:

 

 

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