Strange jobs data today: mediocre job growth, but unemployment rate tumbles

The Bureau of Labor Statistic has just released its monthly Employment Situation Summary, which estimates that the U.S. economy added 114,000 jobs (almost exactly the expert consensus) but that the unemployment rate tumbled to 7.8 percent.

The two data points come from different surveys. The jobs data comes from a survey of payroll establishments, while the unemployment rate comes from a survey of households.

The number of people identifying themselves as unemployed (looking for work but unable to find any) fell by 456,000 over the month.

All these numbers, by the way, are adjusted for usual seasonal trends.

From the release, discussing the household survey:

Total employment rose by 873,000 in September, following 3 months of little change. The employment-population ratio increased by 0.4 percentage point to 58.7 percent, after edging down in the prior 2 months. The overall trend in the employment-population ratio for this year has been flat. The civilian labor force rose by 418,000 to 155.1 million in September, while the labor force participation rate was little changed at 63.6 percent.

So the two surveys simply diverged; this wasn’t a case of thousands of Americans giving up looking for work or of going back to school or leaving the labor force for another reason.

The household survey simply showed far more robust job growth.

A few things to keep in mind:

  • The household survey has a much broader definition of “job” — and includes all sorts of unpaid work, internships, self-employment, etc.
  • It’s also possible that we’re just seeing the two estimates lie at the outer bounds of margins of error — one high and one low.
  • Sometimes the payroll survey data simply lags the household survey data, so it’s possible there’s much more robust job growth right now — especially in the small business sector — than has so far been reflected in the payroll estimates.

The two key charts: