U.S. Employment Surveys Diverge, Showing Mixed Labor Recovery
(Bloomberg) -- The November U.S. jobs report presented a seemingly confusing picture: a much lower-than-expected payrolls gain, but strong labor-market progress with a sharp drop in the unemployment rate.
That's because the Bureau of Labor Statistics' monthly report is composed of two surveys -- one of households and the other of employers -- which each have slightly different questions and definitions of employment. For that reason, the numbers can show a marked divergence.
In November, employment increased by 1.14 million in the household survey but payrolls rose by just 210,000 in the employers survey, also referred to as the establishment or payrolls survey. That was the biggest gap between the figures since October 2020.
“This report is a tale of two surveys,” Nick Bunker, economist at Indeed Inc., said in a note. “The household survey shows accelerating employment gains, workers returning to the labor force, and low levels of involuntary part-time work. The payroll survey shows a significant deceleration in job growth, particularly in Covid-affected sectors.”
One of the reasons for the wide difference between the survey figures in November could be that the household survey results are catching up to gains shown in the employer survey earlier this year.
The adjusted household survey figures “lagged the strength in payrolls, and now it's caught up entirely. The year-to-date cumulative change across the two surveys is almost identical at 6.1 million jobs added,” said Omair Sharif, founder and president of Inflation Insights LLC.
Read more: All About the Formulas Behind the Jobs Report Numbers: QuickTake
The BLS says that the household survey employment level is typically “higher than that of the payroll survey because the household survey has a broader employment definition than the payroll survey.” The household survey's employment concept includes people on unpaid leave from their jobs, while that of the payroll survey only includes those who were paid during the reference period.
Each survey serves a distinct purpose, and both “are needed for a complete picture of the labor market,” the BLS says. The establishment survey produces the headline payrolls figure investors watch each month, while the household survey is used to calculate the unemployment rate.
“The difference between the November household and payroll measures of employment is remarkably wide, but the latter is much more reliable,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note. “Over time, the household measure tends to oscillate around the trend in payrolls.”
©2021 Bloomberg L.P.
-
Unhedged Position | Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
