Labor Statistics
Perhaps one of the most eagerly awaited economic indicators, labor statistics are very influential on the behavior of the financial markets. Basically, the more people that have jobs to earn money, the more money there is available to spend in the economy, and the better we can assume the overall well-being of the general public is. Labor statistics are also important as they are very timely. The figures are reported within a week of when they are actually gathered. The report contains details about earnings as well the overall climate of the job market. The reports are broken down into household and establishment surveys.
Household surveys are done by census workers and are conducted either in person, or by telephone. Addresses are selected at random, and whoever lives in a chosen address inherits the opportunity to participate in this survey. I actually have a friend who currently lives in a surveyed address. I was even there for his first survey. Seems like a waste of time to me, but it’s a good thing people like my friend voluntarily participate in the survey – otherwise we wouldn’t have this important figure to go off of.
Establishment surveys, also called payroll surveys, often carry more weight than household surveys. Think back to my friend and I drinking beers on a Friday afternoon, only to be interrupted by a census worker conducting unemployment surveys. Multiply this scenario across the country and think about the results. I digress. Payroll surveys contain data gathered from some 400,000 businesses and government agencies. Initially, 60-70% of the results make it back in time for the initial report. For the following two revisions, this response rate reaches closer to 90%.
Revisions are very important as they pertain to the labor statistics report. Small businesses are notoriously late in submitting their response (if they ever do – go back to my friend and I drinking beer, now instead of his apartment, its our small business), but can be very influential in forecasting the job market outlook. Small businesses are often the first to hire new employees in an expanding economy. This is because most small businesses do not have the cushion to support redundant employees, thus if they need an account specialist, they will have to hire an account specialist – there isn’t one laying around in another department. While small business hires may not be the most numerically impacting, remember these businesses are still small, they nonetheless provide a more sensitive reading of the job market.
Unemployment statistics are released at 8:30 am EST on the first Friday of every month by the Bureau of Labor Statistics (BLS). You can find the hard data on their website: http://stats.bls.gov
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