110,000 New jobs, Unemployment up ???
 

Can somebody tell me how this works please?

http://www.thestreet.com/s/jobs-repo...0382962_3.html

"Stocks' gains came after a Labor Department report said that the U.S. economy added 110,000 workers last month, easing, at least momentarily, the worst concerns about the health of the job market."

"As expected, the unemployment rate rose to 4.7% from 4.6%, while average hourly earnings rose 0.4%, slightly above expectations."

Is it something simple I'm missing? How and why are people happy that we added 110,000 jobs last month and yet unemployment still went up .1% ?

Re: 110,000 New jobs, Unemployment up ???
 

Because the expectations were for less jobs to be created?

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]
Can somebody tell me how this works please?

http://www.thestreet.com/s/jobs-repo...0382962_3.html

"Stocks' gains came after a Labor Department report said that the U.S. economy added 110,000 workers last month, easing, at least momentarily, the worst concerns about the health of the job market."

"As expected, the unemployment rate rose to 4.7% from 4.6%, while average hourly earnings rose 0.4%, slightly above expectations."

Is it something simple I'm missing? How and why are people happy that we added 110,000 jobs last month and yet unemployment still went up .1% ?

[/ QUOTE ]

wierd story. unemployement has been at 4.7% for a while.

starting there, that rate is the #people out of work/ # people in the labor force.

so it could go up for a number of reasons (people drop out of labor force etc.).

more importantly though is how the #s come in relative to expectations.

jobless claims came in 317k vs. 310k expected yesterday and today the 110k jobs added were less than the 115k expected.

further, the consensus expectations on UE rate was 4.7% and it came in at that.

it is important to note here though that last month 100k jobs were expected to be added and we LOST 4k.

so the 5k differential of expected vs. actual was small here and we actually added jobs so that is good news relative to last month.

the increased hourly wages though cuts both ways.

first, more wages means more income for consumers.

second, more wages means lower margins for producers and higher possible future inflation (b/c wages are sticky. harder to cut them than to raise them in a tight market, which is what we have now)

the market likely viewed it as VERY good given last month's disappointment.

to get what is expected during these reoprts go to "bloomberg.com" and go to "Market Data" and then "Economic Reprots" or "Economic Data" on that scroll down menu.

hope this helps,
Barron

Re: 110,000 New jobs, Unemployment up ???
 

Good call on the economic calendar, very interesting.

If I could ask for just a little more clarification for what is confusing me.

If there are 100,000 more jobs than there were last month, how can less people have jobs when we just said that there are 100,000 positions that didn't exist last month.

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]
Good call on the economic calendar, very interesting.

If I could ask for just a little more clarification for what is confusing me.

If there are 100,000 more jobs than there were last month, how can less people have jobs when we just said that there are 100,000 positions that didn't exist last month.

[/ QUOTE ]

110,000 18 year olds enter the market. Tada, 10,000 people added to UE rolls. (its not going to be 110,000 18 year olds, there are otherways for those looking for work to be added to UE numbers).

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]
Good call on the economic calendar, very interesting.

If I could ask for just a little more clarification for what is confusing me.

If there are 100,000 more jobs than there were last month, how can less people have jobs when we just said that there are 100,000 positions that didn't exist last month.

[/ QUOTE ]

first off, unemployment (like i mentioned above) just (imperfectly) measured the % of the labor force that have jobs.

the labor force can change for a ton of reasons.

visit www.bls.gov and go to unemployment rate to see how it is exactly calculated.

it takes into account discouraged workers (i forget the real term) and drops them out. i.e. if you have stopped looking for a job b/c you couldn't find one you are "not in the labor force"

that may be innaccurate but it is close enough.

basically, just know the UE rate is not a perfect measure. it is like a capacity measure that helps to tell whether we are near the point at which any additional growth will likely be inflationary (like capacity utilization).

to more directly answer your question, there aren't "100k more jobs than there were last month" there are "100k more jobs filled than were filled last month"

so right now, more people have jobs than had jobs last month (yet more people filed for first time unemployment benefits than they did last week/month than expected).

i hope this helps. let me know if i didn't answer your Q.

Barron

Re: 110,000 New jobs, Unemployment up ???
 

soko,

We are a growing nation. For whatever reason, we need to add in the 150,000 jobs a month range to keep unemployment stable.

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]
soko,

We are a growing nation. For whatever reason, we need to add in the 150,000 jobs a month range to keep unemployment stable.

[/ QUOTE ]

what about changing labor force participation rates? does that assume LFP is stable?

also where did you get this estimate? i'm assuming that this is either a bls, bea, or fed # so that means that they also break it down to which sectors of the economy need what amount of those monthly employment additions and we can get a better sense of where they come from.

thanks,
Barron

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]
[ QUOTE ]
Good call on the economic calendar, very interesting.

If I could ask for just a little more clarification for what is confusing me.

If there are 100,000 more jobs than there were last month, how can less people have jobs when we just said that there are 100,000 positions that didn't exist last month.

[/ QUOTE ]

first off, unemployment (like i mentioned above) just (imperfectly) measured the % of the labor force that have jobs.

the labor force can change for a ton of reasons.

visit www.bls.gov and go to unemployment rate to see how it is exactly calculated.

it takes into account discouraged workers (i forget the real term) and drops them out. i.e. if you have stopped looking for a job b/c you couldn't find one you are "not in the labor force"

that may be innaccurate but it is close enough.

basically, just know the UE rate is not a perfect measure. it is like a capacity measure that helps to tell whether we are near the point at which any additional growth will likely be inflationary (like capacity utilization).

to more directly answer your question, there aren't "100k more jobs than there were last month" there are "100k more jobs filled than were filled last month"

so right now, more people have jobs than had jobs last month (yet more people filed for first time unemployment benefits than they did last week/month than expected).

i hope this helps. let me know if i didn't answer your Q.

Barron

[/ QUOTE ]

Also, isn't the unemployment rate from a different survey (household versus payroll)?

Re: 110,000 New jobs, Unemployment up ???
 

You might also be interested in the Birth/Death model. I'm not exactly sure how it plays in over the long run, but a lot of people say it's a bit fishy.

http://globaleconomicanalysis.blogsp...ly-flawed.html

John

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]


You might also be interested in the Birth/Death model. I'm not exactly sure how it plays in over the long run, but a lot of people say it's a bit fishy.

http://globaleconomicanalysis.blogsp...ly-flawed.html

John

[/ QUOTE ]

is the birth/death model literally just added to the monthly nonfarm payroll estimates?

are the non farm payroll estimates seasonally adjusted? (if so then the birth/death model is not added to it since the b/d model is not seasonally adjusted and cannot be incorporated in seasonally adjusted data)

where exactly is this model used?

Barron

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]
[ QUOTE ]
Good call on the economic calendar, very interesting.

If I could ask for just a little more clarification for what is confusing me.

If there are 100,000 more jobs than there were last month, how can less people have jobs when we just said that there are 100,000 positions that didn't exist last month.

[/ QUOTE ]

first off, unemployment (like i mentioned above) just (imperfectly) measured the % of the labor force that have jobs.

the labor force can change for a ton of reasons.

visit www.bls.gov and go to unemployment rate to see how it is exactly calculated.

it takes into account discouraged workers (i forget the real term) and drops them out. i.e. if you have stopped looking for a job b/c you couldn't find one you are "not in the labor force"

that may be innaccurate but it is close enough.

basically, just know the UE rate is not a perfect measure. it is like a capacity measure that helps to tell whether we are near the point at which any additional growth will likely be inflationary (like capacity utilization).

to more directly answer your question, there aren't "100k more jobs than there were last month" there are "100k more jobs filled than were filled last month"

so right now, more people have jobs than had jobs last month (yet more people filed for first time unemployment benefits than they did last week/month than expected).

i hope this helps. let me know if i didn't answer your Q.

Barron

[/ QUOTE ]

Followed your link to the BLS site, I see that the employment report is a sample-based estimate. I’m not a math guy but I’m guessing that their error rate would have to be very small. With the statistical sampling based on a labor force of 153,000,000 and they state 104,000 is statistically significant, what would their error rate be?

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Good call on the economic calendar, very interesting.

If I could ask for just a little more clarification for what is confusing me.

If there are 100,000 more jobs than there were last month, how can less people have jobs when we just said that there are 100,000 positions that didn't exist last month.

[/ QUOTE ]

first off, unemployment (like i mentioned above) just (imperfectly) measured the % of the labor force that have jobs.

the labor force can change for a ton of reasons.

visit www.bls.gov and go to unemployment rate to see how it is exactly calculated.

it takes into account discouraged workers (i forget the real term) and drops them out. i.e. if you have stopped looking for a job b/c you couldn't find one you are "not in the labor force"

that may be innaccurate but it is close enough.

basically, just know the UE rate is not a perfect measure. it is like a capacity measure that helps to tell whether we are near the point at which any additional growth will likely be inflationary (like capacity utilization).

to more directly answer your question, there aren't "100k more jobs than there were last month" there are "100k more jobs filled than were filled last month"

so right now, more people have jobs than had jobs last month (yet more people filed for first time unemployment benefits than they did last week/month than expected).

i hope this helps. let me know if i didn't answer your Q.

Barron

[/ QUOTE ]

Followed your link to the BLS site, I see that the employment report is a sample-based estimate. I’m not a math guy but I’m guessing that their error rate would have to be very small. With the statistical sampling based on a labor force of 153,000,000 and they state 104,000 is statistically significant, what would their error rate be?

[/ QUOTE ]

you mean what is their sampling error?

if so then you'd need the standard deviation of the sample (which, i don't know). at lesat if you get it, then you can be comfortable with it since in these types of questions (jobs added), the sampling distribution can be treated comfortably as normal (i.e. one or a few massively outlying observations won't change the average that much).

further, what useful information would this sampling error give you?

and why does it matter?

i mean the # of jobs added every month is a bls estimate, sure, but i'd give them the benefit of the doubt that it is reasonably precise ...

Barron

EDIT: i just reread your question and i may not be answering it. was the 104k the jobs added/month #? because to relate that to the "labor force of 153,000,000" you'd also need the change in labor force (i.e. how much has unemployment changed on net from 1 month to the next).

typcially it is reported as a level rate rather than a change. i.e. 4.7% unemployment vs. a X% change in unemployment (since it would be a rate of change of a rate...like GDP). for labor statistics, i think most like to think in levels and rates rather than rates of change. i don't know though and i'm just trying to get at what you really what to know....

i'm just babbling at this point. can you rephrase your question in context so i know what you want to know and how you want to use it?

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]


you mean what is their sampling error?

if so then you'd need the standard deviation of the sample (which, i don't know). at lesat if you get it, then you can be comfortable with it since in these types of questions (jobs added), the sampling distribution can be treated comfortably as normal (i.e. one or a few massively outlying observations won't change the average that much).

further, what useful information would this sampling error give you?

and why does it matter?

i mean the # of jobs added every month is a bls estimate, sure, but i'd give them the benefit of the doubt that it is reasonably precise ...

Barron

EDIT: i just reread your question and i may not be answering it. was the 104k the jobs added/month #? because to relate that to the "labor force of 153,000,000" you'd also need the change in labor force (i.e. how much has unemployment changed on net from 1 month to the next).

typcially it is reported as a level rate rather than a change. i.e. 4.7% unemployment vs. a X% change in unemployment (since it would be a rate of change of a rate...like GDP). for labor statistics, i think most like to think in levels and rates rather than rates of change. i don't know though and i'm just trying to get at what you really what to know....

i'm just babbling at this point. can you rephrase your question in context so i know what you want to know and how you want to use it?

[/ QUOTE ]

Just asking as an extension to my confusion over why people give so much credence to this report.

The 104k is from their FAQ “An over-the-month employment change of 104,000 is statistically significant in the establishment survey”. Since there is rarely a 104K change from month to month I don’t understand why so much is made of numbers that according to the BLS aren’t even statistically significant.

It seemed to me that with statistical sampling based on a labor force of 153,000,000 and 104k being the point that the results became statistically significant, they are claiming a pretty high level of accuracy. Most other reports have an error rate in % I was just curious what this reports % error rate was to compare and contrast with others to see if they really are claiming an unusually high level of accuracy.

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]
[ QUOTE ]


you mean what is their sampling error?

if so then you'd need the standard deviation of the sample (which, i don't know). at lesat if you get it, then you can be comfortable with it since in these types of questions (jobs added), the sampling distribution can be treated comfortably as normal (i.e. one or a few massively outlying observations won't change the average that much).

further, what useful information would this sampling error give you?

and why does it matter?

i mean the # of jobs added every month is a bls estimate, sure, but i'd give them the benefit of the doubt that it is reasonably precise ...

Barron

EDIT: i just reread your question and i may not be answering it. was the 104k the jobs added/month #? because to relate that to the "labor force of 153,000,000" you'd also need the change in labor force (i.e. how much has unemployment changed on net from 1 month to the next).

typcially it is reported as a level rate rather than a change. i.e. 4.7% unemployment vs. a X% change in unemployment (since it would be a rate of change of a rate...like GDP). for labor statistics, i think most like to think in levels and rates rather than rates of change. i don't know though and i'm just trying to get at what you really what to know....

i'm just babbling at this point. can you rephrase your question in context so i know what you want to know and how you want to use it?

[/ QUOTE ]

Just asking as an extension to my confusion over why people give so much credence to this report.

The 104k is from their FAQ “An over-the-month employment change of 104,000 is statistically significant in the establishment survey”. Since there is rarely a 104K change from month to month I don’t understand why so much is made of numbers that according to the BLS aren’t even statistically significant.

It seemed to me that with statistical sampling based on a labor force of 153,000,000 and 104k being the point that the results became statistically significant, they are claiming a pretty high level of accuracy. Most other reports have an error rate in % I was just curious what this reports % error rate was to compare and contrast with others to see if they really are claiming an unusually high level of accuracy.

[/ QUOTE ]

i gotcha now.

the next question is "significant at what level? 90? 95? 99?" that makes a huge difference too.

judging from the way you relayed the quote though i'd guess 90% since it seems to cross the statistically signifcant barrier at 104k.

either way it's a good point, but in general i think despite the signifance level, it is how it comes in vs. the other (significant or not) expectations of bloomberg surveyed economists.

also, i don't htink compairing the figure of 104k to the 153,000,000 isn't appropriate. the comparison would be comparing 104k to the rate of change of the labor force.

that is apples to apples.

i guess though that would only make sense if both #s were significant.


Barron

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]
[ QUOTE ]


You might also be interested in the Birth/Death model. I'm not exactly sure how it plays in over the long run, but a lot of people say it's a bit fishy.

http://globaleconomicanalysis.blogsp...ly-flawed.html

John

[/ QUOTE ]

is the birth/death model literally just added to the monthly nonfarm payroll estimates?

are the non farm payroll estimates seasonally adjusted? (if so then the birth/death model is not added to it since the b/d model is not seasonally adjusted and cannot be incorporated in seasonally adjusted data)

where exactly is this model used?

Barron

[/ QUOTE ]

Here's one explaination I found, from:
http://www.dailyreckoning.com/Featur...son060107.html

[ QUOTE ]
Their methodology goes like this:

- The Net Birth/Death model first creates jobs on a non-seasonally adjusted basis;

- The computer-generated jobs are then added to the jobs actually reported by the payroll survey for the month;

- The new total is then seasonally adjusted which creates the reported monthly unemployment number announced to the public. It's only much later that ongoing payroll surveys confirm or rebut the estimated job creation.

[/ QUOTE ]


Hope it's helpful,
John

Re: 110,000 New jobs, Unemployment up ???
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]


You might also be interested in the Birth/Death model. I'm not exactly sure how it plays in over the long run, but a lot of people say it's a bit fishy.

http://globaleconomicanalysis.blogsp...ly-flawed.html

John

[/ QUOTE ]

is the birth/death model literally just added to the monthly nonfarm payroll estimates?

are the non farm payroll estimates seasonally adjusted? (if so then the birth/death model is not added to it since the b/d model is not seasonally adjusted and cannot be incorporated in seasonally adjusted data)

where exactly is this model used?

Barron

[/ QUOTE ]

Here's one explaination I found, from:
http://www.dailyreckoning.com/Featur...son060107.html

[ QUOTE ]
Their methodology goes like this:

- The Net Birth/Death model first creates jobs on a non-seasonally adjusted basis;

- The computer-generated jobs are then added to the jobs actually reported by the payroll survey for the month;

- The new total is then seasonally adjusted which creates the reported monthly unemployment number announced to the public. It's only much later that ongoing payroll surveys confirm or rebut the estimated job creation.

[/ QUOTE ]


Hope it's helpful,
John

[/ QUOTE ]

thanks.

that stuff in bold i think is what i'd really like to see. if they confirm it with actual jobs created then this should be easy as pie right?

how is the "created" - "actual" jobs distributed?

seems easy if we can get those data.

Barron