How to Read BLS Employment Situation Reports

On the first Friday of every month, the Bureau of Labor Statistics releases the Employment Situation Summary — the "jobs report." It is arguably the most market-moving economic data release in the U.S., shifting bond yields, equity prices, and currency exchange rates within seconds of release. Here is a guide to reading it correctly.

Two Surveys, Two Numbers

The jobs report draws on two separate surveys. The establishment survey (CES) surveys about 119,000 businesses and produces the headline nonfarm payroll employment number. The household survey (CPS) surveys about 60,000 households and produces the unemployment rate.

These two measures can move in opposite directions in a given month because they measure different things. Payrolls count jobs; the household survey counts employed people. A person working two part-time jobs counts as one employed person in the household survey but two jobs in payrolls.

What to Focus On

Economists tend to focus on: (1) nonfarm payroll change — the headline number; (2) private payroll change — excluding volatile government hiring; (3) the unemployment rate; (4) the labor force participation rate — whether people are in the workforce at all; (5) average hourly earnings growth — wage inflation; (6) the workweek — a leading indicator, since employers cut hours before cutting headcount.

Revisions Matter

The initial payroll estimate is based on roughly 70% of survey responses. It is revised twice — in the following two months — as more data arrives. The annual benchmark revision (usually in February) reconciles payrolls against complete unemployment insurance records. Over time, revisions can significantly change the picture of labor market momentum.