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Questionable jobs report: Unemployment hits 7.8% in September “Unexpectedly”

Despite slowing job growth, strangely, the key unemployment rate fell .3% to 7.8% due to an unexpected upward 86,000 job revision by the Department of Labor.

Secretary Solis spent the morning defending the rosy unemployment rate that is based on questionable revisions. Upwardly revising public sector employment  by tens of thousands of jobs in the report out just after her boss’s dismal performance in the first presidential debate.

Solis even tried to suggest that the upward revisions were in private sector jobs, which would indicate a strengthening jobs picture, but was rebutted by her own department’s statistics.

This is not the first report full of questionable statistics. As John Nolte at Big Government reported:

Finally, this is the second hinky looking report/revision from the Bureau of Labor Statistics in as many months. Just days ago, 400,000 jobs were “discovered“–almost the exact number Obama needed to have a record of creating more jobs on his watch than were lost.Payroll Survey shows slowing jobs growth

The question remains how many more hidden jobs will be found in the final report before the election due out on November 2nd.

Jobs Report Overview

The Bureau of Labor Statistics report released today showed that only 114,000 new jobs were created – a slowing from the 2012 average of 147,000 jobs per month and 153,000 jobs per month in 2011. The report offers little explanation for the statistical drop considering the lack of new jobs in September.

Underemployment, or those taking part-time or underpaying jobs due to economic conditions, rose from 8.0 million to 8.6 million.

The number of workers looking for work in the last 12 months, but unable to find it was unchanged from a year ago at 2.5 million.

The long-term unemployed numbers were unchanged with 4.8 million job-seekers unable to find work for 27 or more weeks. This distressing number makes up 40.1% of all unemployed persons.

Health care lead the way with 44,000 new jobs in September. Transportation and warehousing followed with 17,000 new jobs while the financial sector added 13,000.

Manufacturing led the way in job losses with 16,000 jobs being erased which leaves the sector with flat hiring since April.

Oddity in the Household Survey shows drastic jump in employment

The household survey respondents indicate that 873,000 new jobs were found in September. Since the civilian labor force grew only 418,000, that means 52% of all job gains were in the public sector. The economy needs strong private sector growth to heal.

According to the Bureau of Labor Statistics own site:

The payroll survey provides a highly reliable gauge of monthly change in nonfarm payroll employment. The household survey provides a broader picture of employment including agriculture and the self-employed

The level of disparity between the household and payroll surveys is irregular, but not inexplicable. The loose definition of employment in the household survey is likely the reason. While the payroll survey only counts those with paying jobs, the household survey counts “self employed, unpaid family workers, agriculture and related workers, private household workers, and workers absent without pay.”[1]

Another reason for the oddity could be the dramatic difference in sampling errors. While the payroll survey covers businesses that account for about one-third of all employment, the household survey only covers 60,000 households which is an infinitesimally-small sample of all households in the nation.

While the employment survey needs a change of approximately 90,000 jobs to show statistical improvement, the household survey requires a month-over-month change of 436,000 jobs. Equivalence would therefore be expected if the payroll survey had increased by 180,000 jobs for parity.

An assumption would be that the large increase in the housing survey was due to low-quality jobs in agriculture and the non-paying family member sectors – hardly a reason to celebrate.

Sources:
[1] Employment from the BLS household and payroll surveys – http://www.bls.gov/web/empsit/ces_cps_trends.pdf

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