How to read the jobs report

The Employment Situation report from the Bureau of Labor Statistics comes out at 8:30 AM ET, usually on the first Friday of the month. It is two reports in one, built from two separate surveys, and the headlines come from different halves.

Payrolls: the business survey

The change in nonfarm payrolls, the number most headlines lead with, comes from a survey of about 120,000 businesses and government agencies. It counts jobs, not people, so someone with two part-time jobs counts twice. The same survey gives average hourly earnings and the length of the workweek.

Monthly swings are noisy. The margin of error on the monthly payroll change is more than 100,000 jobs, so a gain of 30,000 and a gain of 90,000 can describe the same underlying trend.

The unemployment rate: the household survey

The unemployment rate comes from interviews with about 60,000 households. People count as unemployed if they had no work in the survey week, could have started a job and looked for one in the past four weeks; people on temporary layoff who expect to be called back count even if they didn’t look. Someone who stops looking leaves the labor force and is no longer counted, which is why the rate can fall for discouraging reasons.

A broader measure, called U-6, adds people who want work but have stopped looking and people working part time who want full-time hours. It runs well above the headline rate.

Why the two can disagree

The surveys count different things. The household survey includes the self-employed and farm workers and counts people, not jobs. Over a few months they usually tell the same story; in any single month they can point in different directions.

Revisions

Each month’s payroll figure is revised in the next two reports as more businesses respond. Once a year, with the January report in early February, BLS lines the payroll counts up with unemployment insurance tax records, which can shift the past year’s totals by hundreds of thousands.

What it means for your money

The Fed has two goals, maximum employment and stable prices, so a run of strong or weak reports can change its plans for interest rates. Average hourly earnings show whether pay is keeping up; compare them with inflation on the real wages tracker.