Monday, September 10, 2007

The August Job Loss

The Bureau of Labor Statistics reported "nonfarm payroll employment was essentially unchanged," declining by 4,000 (out of 138 million) in August. That number came from the BLS survey of firms (the "establishment survey"). The most closely watched statistic about the labor market - the unemployment rate - comes from their survey of households; it was unchanged at 4.6%.

The household survey did have some bad news, though - it also reported declines in total employment, as well as in the labor force (the number of people working or looking for work). The number of unemployed persons also fell; the unemployment rate is the number of unemployed as a fraction of the labor force - in August both the numerator and denominator decreased, leaving the fraction the same. The decline in labor force participation may be a sign people are discouraged about job prospects.

The Wall Street Journal's Real Time Economics had reactions from Wall Street "economists", who were worried (hint, hint, Bernanke) and from politicians, who were - predictably - divided.

At Econbrowser, Menzie Chinn draws a parallel with the last recession.

As a caution on reading too much into one month's numbers, it should be noted that there are occasional bad months even during expansions - during the 1990's expansion, payroll employment declined in March 1993, May 1995, January 1996 and August 1997, and that the payroll employment figure is preliminary and subject to revision by the BLS.

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