The monthly employment situation report came out this morning. The unemployment rate moved from 8.9% to 9.4%. This is at the high end of what was expected (Bloomberg consensus range: 9.1% to 9.4%). The jobs number was significantly better than expected, coming in at -345,000 (Bloomberg consensus range: -625,000 to -495,000). I don’t understand the disparity between these two numbers. I didn’t last month either, but this is ridiculous. Not only this, but previous months’ job numbers were revised up:

The change in total nonfarm employment for March was revised from -699,000 to -652,000, and the change for April was revised from -539,000 to -504,000.

I don’t know what’s going on with the data. Maybe it has been determined that people are leaving the workforce (and therefore don’t count as unemployed). That would explain the smaller numbers of losses and the expected/high unemployed percentage.

Now that I got that out, here’s the important bit from the report:

Nonfarm payroll employment fell by 345,000 in May, about half the average monthly decline for the prior 6 months, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The unem- ployment rate continued to rise, increasing from 8.9 to 9.4 percent. Steep job losses continued in manufacturing, while declines moderated in construction and several service-providing industries.

The number of unemployed persons increased by 787,000 to 14.5 million in May, and the unemployment rate rose to 9.4 percent. Since the start of the recession in December 2007, the number of unemployed persons has risen by 7.0 million, and the unemployment rate has grown by 4.5 percent- age points.

This can be taken as “positive second derivative is good news” or “blowing away expectations is good news.” I’m tempted to take the “DOL equals Department of Lies” view.

All right, I’m tempted to see what the change in the workforce is:

About 2.2 million persons (not seasonally adjusted) were marginally attached to the labor force in May, 794,000 more than a year earlier. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, there were 792,000 discouraged workers in May, up by 392,000 from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The other 1.4 million persons marginally attached to the labor force in May had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

This is a point in favor of looking at U-6 instead of U-3. U-3 is the official unemployment rate, but U-6 includes the people specifically excluded in the passage above. If we’re looking at the macro picture, U-6 is probably more relevant. If we’re stuck with a 10 hour a week job when we wanted a full time job, U-6 is more relevant. Table A-12 gives us the alternative measures of labor underutilization (their term). U-6 is now at 16.4%, up from 15.8%.

I’ll be blunt: I don’t understand these numbers. The weekly job losses have been sustained above the 600k mark. The number of available jobs has been shrinking (see this). Unless people are magically being defined out of the labor force (which appears to be happening to a degree), these numbers don’t jive.

-Reblogged via crazynutjob,