employment report

Karim writes:

In the FAQ section of the BLS website:
Why are there two monthly measures of employment?

The household survey and establishment survey both produce sample-based estimates of employment and both have strengths and limitations. The establishment survey employment series has a smaller margin of error on the measurement of month-to-month change than the household survey because of its much larger sample size. An over-the-month employment change of about 100,000 is statistically significant in the establishment survey, while the threshold for a statistically significant change in the household survey is about 400,000. However, the household survey has a more expansive scope than the establishment survey because it includes the self-employed, unpaid family workers, agricultural workers, and private household workers, who are excluded by the establishment survey. The household survey also provides estimates of employment for demographic groups

Other features of the HH survey are that it is MUCH more volatile and it is also never revised.

Last 3mths of data:         Jul   Aug      Sep       Avg
HH Survey                     -195k  -119k  +873k +186k
Establishment Survey +181k  +142k +114k +145k

So despite often showing opposite signs month to month, over time these series tend to send the same message.

In terms of the data yesterday, a big chunk of the gains in the HH Survey came in part-time employment and in the 16-24 age group. One explanation is many students who went back to school also picked up jobs.

Fed Impact
First, count me as among those who think there is 0 chance these numbers were manipulated. For the Fed, for the reasons the BLS explains above, they look at both indicators, though they favor the payroll survey due to its greater sample size. Bigger picture the two indicators both tell a story of modest improvement in the labor market. Not the ‘significant’ improvement the Fed is looking for. The quirkiness of the monthly data is also why they have a tough time with specific numerical objectives on the unemployment rate, instead favoring the ‘we’ll tell you when we get there’ approach. So full steam ahead for QE3, especially as we journey closer to the edge of the fiscal cliff.