Courtesy of Mish.
Initial Reaction
The establishment survey showed a gain of 169,000 jobs.
For the second consecutive month, the previous two months were revised lower. The employment change for July was revised down by 58,000 (from +162,000 to +104,000). Last month the BLS revised June employment down by 7,000 (from +195,000 to +188,000).
This month, the BLS said June was still not correct and revised June lower by another 16,000 to +172,000.
See the change in pattern here? Earlier in the year, revisions were to the plus side.
In spite of the above, the unemployment rate dropped 0.1 to 7.3%. After all, it’s the household survey that determines the unemployment rate, not the establishment survey baseline jobs number. So let’s take a look at the factors.
Explaining the Unemployment Rate Drop
- Employment fell by 115,000
- Those in the labor force fell by 312,000
- The civilian population rose by 203,000.
- The Participation Rate (The labor force as a percent of the civilian noninstitutional population) fell 0.2 to 63.2%, beating the low of 63.3% dating back to 1979.
Employment fell by 115,000 but the labor force fell more (in spite of a population rise of 203,000). That’s why the unemployment rate dropped.
August BLS Jobs Statistics at a Glance
- Payrolls +169,000 – Establishment Survey
- US Employment -115,000 – Household Survey
- US Unemployment -198,000 – Household Survey
- Involuntary Part-Time Work -334,000 – Household Survey
- Voluntary Part-Time Work +211,000 – Household Survey
- Baseline Unemployment Rate -0.1 – Household Survey
- U-6 unemployment -0.3 to 13.7% – Household Survey
- Civilian Labor Force -312,000 – Household Survey
- Not in Labor Force +516,000 – Household Survey
- Participation Rate -0.2 at 63.2 – Household Survey
Quick Notes About the Unemployment Rate …
