About that "Drop" in the Unemployment Rate

A new report out from the BLS today reports that the unemployment rate fell from 9.5% in June to 9.4% in July.

As we've been covering here the weird situation with auto layoffs this year has played hell with the seasonal adjustment formula that the government uses to normalize numbers for regular seasonal ups and downs.

And when you look at the actual report (Table A-11) you can see that the there was no change in the nonadjusted unemployment rate, which held steady at 9.7%.

Further, any actual recovery would presumably involve a net rise in the number of employed. Yet even when we look at the seasonally adjusted employment numbers, we see that the number of employed actually fell from 140,196,000 in June to 140,041,000 in July. That's 155,000 less jobs month over month. Further the labor force itself actually shrank by 422,000 month over month. And the portion of the population not in the work force is growing. It's up 637,000 month over month. So simple population growth has added over 200,000 people to the pool of possible workers, but they ain't swimming.

There are reasons to be skeptical about the new unemployment numbers, and I'd suggest that celebration is a bit premature. It's likely that what we are looking at is the same statistical artifact that had been skewing the initial claims data for the past few months.

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more statistics from the report

total numbers of unemployed, 14.5 million.

The number of long-term unemployed (those jobless for 27 weeks or more) rose by 584,000 over the month to 5.0 million. In July, 1 in 3 unemployed persons were jobless for 27 weeks or more.

Among the marginally attached, there were 796,000 discouraged workers in July, up by 335,000 over the past 12 months. (The data are not seasonally adjusted.) Discouraged workers are persons not currentlylooking for work because they believe no jobs are available for them.
The other 1.5 million persons marginally attached to the labor force in July had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities

Here is the first paragraph from the BLS press release

Nonfarm payroll employment continued to decline in July (-247,000), and the unemployment rate was little changed at 9.4 percent, the U.S. Bureau of Labor Statistics reported today. The average monthly job loss for May through July (-331,000) was about half the average
decline for November through April (-645,000)

Here is the link to table A-11.

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archived BLS releases

This took me forever to find.

Firstly June 2009 BLS release and one can see two things. First the official unemployment rate was 9.5% and then in table A-11, here, we see that the unemployment rate was 9.7%.

Then, archived releases, which are not adjusted, simply the release at the time are here.

I'm thinking we might upload more data sheets, charts because this current release only compares to 1 year ago, not the month-to-month change.

I have to agree with you manfrommiddletown, in looking over all of these stats upon first glance, it doesn't look like anything has changed.

It also appears to have not gotten worse.

This is the new good if you notice, "not worse" is now taken as "good".

What would be interesting is to graph the people dropping off of the count.

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More on the unemployment rate

Found this, which should add to the discussion.

The auto sector added 28,200 to the industry payroll in July, which was the highest tally in 11 years. To show you just how big that really is, it is a 69% annualized surge. Normally, the industry, which is in secular decline, posts job losses of between 20,000 and 30,000 consistently, so this alone represented roughly a 50,000 swing. We estimate that there was about a 30,000 swing in the rest of the manufacturing sector due to the spillover from the current inventory adjustment in the motor vehicle industry. The 0.3% MoM increase in the workweek was also skewed by the 4.1% MoM jump in the auto sector.

As we mentioned, there have been large fluctuations in the federal government payroll too. After hiring a slew of Census workers in the spring, there were 57,000 layoffs in May-June and then we saw in today’s report that 12,000 federal workers were “hired” in July. Again, mathematically, this contributed about 20,000 to today’s headline number. In other words, and we have no intent on raining on anyone’s parade, there was about 100,000 non-recurring payrolls in that top-line figure. It may be dangerous to extrapolate today’s report into a view that we are about to fully turn the corner on the job market front.

Yes, the income number was also firm; average weekly earnings popped 0.5%, but again, this reflected the bounce in the auto sector as well as the 10.7% increase in the minimum wage to $7.25 an hour. Again, this is a non-recurring item and does not at all reflect an improvement in underlying income fundamentals in the personal sector. We had a similar bounce in the summer of 2008 when the minimum wage was last boosted.

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auto workers

is that manufacturing jobs or is that just the return of workers from the summer shut down or ?

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