Weekly Market Pulse: Is The Economy Weaker Than It Appears?

cemagraphics The employment report released last Friday offered contradictory views of the state of the economy. The Current Employment Survey (also called the payroll or establishment survey), which comes from a survey of 119,000 businesses, showed a gain of 272,000 jobs for the month of May, which is right in line with the monthly average since April of 2022. On the other hand, the unemployment rate rose to 4%, up from 3.

9% last month and 3.4% in January of 2023, the low for this cycle. If we’ve been adding 250k jobs per month since then, why is the unemployment rate rising? That isn’t as hard as it sounds since there is a numerator and a denominator in that equation, but it is unusual.

The first thing to realize is that the two figures come from different surveys. The establishment survey is a survey of 119,000 businesses. That sounds like a lot, but in a country of 336 million people and approximately 33 million businesses, it’s a drop in the proverbial bucket.

And it isn’t very accurate, with a +/- of about 130,000 in any given month. The unemployment rate, on the other hand, comes from the Current Population Survey (also called the Household survey), which is a survey of 60,000 households. This report also produces a jobs figure every month in addition to the unemployment rate, and it is even less accurate with a +/- of 600,000.

The revisions to the employment reports take months and can easily turn a positive to a negative and vice versa. Just to pick one at ra.