Mixed Messages in September Employment Data

On the one hand, the unemployment rate unexpectedly dropped to 5.6% in September from 5.7% in August, according to the Labor Department.  

But payrolls outside the farm sector tumbled by 43,000 jobs in September, the first drop in the gauge since April, and much worse than the gain of 5,000 positions that had been anticipated by economists.

Offsetting some of the impact of the September reading was a sharp upward revision in August payrolls to a 107,000 gain – much better than the previously reported 39,000 increase.

Comings and Goings On

While economic gurus look at both reports to gauge the strength of the economy, a number put more weight on the forecasting power of the payroll survey, which comes from different sources than the unemployment report.   The unemployment report, in contrast, tends to be something of a lagging economic indicator – validating trends already in evidence in other indicators.

An economist with the Labor Department’s Bureau of Labor Statistics there was no single factor that could explain the discrepancy between the two series, according to Reuters.

The civilian jobless rate is calculated by the Bureau of Labor Statistics based on a survey of households, while the payroll figure comes from a survey of businesses.