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Employment situation report (aka labor report)

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Employment situation report (aka labor report)

  1. 1. Employment Situation Report - Labor force and unemployment statistics - Presented by: Alin SturekBUS 531- Managerial Economics March 12, 2013
  2. 2. Agenda• Unemployment Rate Trend• Report Source and Definition• Methodology• Definition of “Unemployed”• Labor Force Trend• Employment Changes Trend• Employment Data Reporting• Employment-Population Ratio and Historical Data• SummaryThe unemployment rate is a key indicator of economic prosperity. Analysis of employment datacan be useful in understanding current economic trends, anticipating changes in the macro-economy and gauging impact on business conditions.
  3. 3. Unemployment Rate Historical Trend(1948 – 2013) 10.8 10.0 7.8Whether the unemployment rate rises or drops is a function of two factors: How many jobs are created or lost How fast the labor force is rising or contractingSource: Bureau of Labor Statistics http://data.bls.gov/timeseries/LNS14000000
  4. 4. Report Source and DefinitionEmployment Situation Report• Released by the Bureau of Labor Statistics, division of the U.S. Dept. of Labor• Updated monthly, released the first Friday of every month• Also known as the Labor Report, it is made up of two separate and equally important surveys
  5. 5. Methodology - Part 1Establishment Survey (CES)• Sampling of approximately 145,000 businesses and agencies across the country, covering about one-third of all non-farm workers• Includes non-farm payrolls, hours worked and hourly earnings – Average earnings, overtime, weekly hours• Considered a coincident indicator – indicative of current level of economic activity
  6. 6. Methodology - Part 2Household Survey (CPS)• Sampling of more than 60,000 households produces a figure representing the total number of individuals out of work (unemployment rate)• Compiled by the U.S. Census Bureau with assistance from the Bureau of Labor Statistics – Census-like component, bringing demographic shifts into the mix• Considered a lagging indicator – indicative of post economic activity
  7. 7. Who is Unemployed?• Persons are classified as unemployed if: – They do not have a job – Actively looked for work in the prior 4 weeks – Currently available for work• Calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force• GALLUP also independently provides gauge on the labor market on an ongoing basis: 8.0% in February
  8. 8. Labor Force Historical Trend(2007 – 2012) Year Population Labor % of Total Employed % of Total Unemployed % of Total Force 2007 231,867 153,124 66.0% 146,047 63.0% 7,078 4.6% 2008 233,788 154,287 66.0% 145,362 62.2% 8,924 5.8% 2009 235,801 154,142 65.4% 139,877 59.3% 14,265 9.3% 2010 237,830 153,889 64.7% 139,064 58.5% 14,825 9.6% 2011 239,618 153,617 64.1% 139,869 58.4% 13,747 8.9% 2012 243,284 154,975 63.7% 142,469 58.6% 12,506 8.1% 2012 vs. +11,.417 +1,851 16.2% -3,578 N/A +5,428 N/A 2007*In thousands- Civilian Non-institutional Population: People 16 years of age and older residing in the 50States and D.C. who are not inmates and who are not on active duty in the Armed Forces.- Of the 11.4 million increase in the population since 2007, only 16.2% entered the labor force.Source: Bureau of Labor Statistics http://www.bls.gov/cps/cpsaat01.htm
  9. 9. Employment Changes Historical Trend(2007 – 2013)Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total2007 234 90 186 76 141 80 (35) (24) 77 86 111 93 1,1152008 14 (85) (79) (215) (186) (169) (216) (270) (459) (472) (775) (705) (3,617)2009 (794) (695) (830) (704) (352) (472) (351) (210) (233) (170) (21) (220) (5,052)2010 (13) (40) 154 229 521 (130) (86) (37) (43) 228 144 95 1,0222011 69 196 205 304 115 209 78 132 225 166 174 230 2,1032012 311 271 205 112 125 87 153 165 138 160 247 219 2,1932013 119 236 355*In thousandsSource: Bureau of Labor Statistics http://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth
  10. 10. Employment Data ReportingFebruary 2013 Report (Released March 8, 2013)• Highlights changes from previous month, as well as year-over-year• Non-farm payroll employment rises +236,000; unemployment rate edges down to 7.7%• Household survey found that 444,000 new jobs were part-time jobs!
  11. 11. Employment to Population Ratio• Measures the proportion of the country’s working- age population that is employed; includes those that have stopped looking for work• The ratio is used in conjunction with the unemployment rate to evaluate the labor market• A high ratio means that a good proportion of the working age population is employed, and typically this positively impacts GDP per capita – February 2013 ratio is 58.6
  12. 12. Employment to Population RatioHistorical Trend (1948 – 2013) 64.6 58.2Source: Bureau of Labor Statistics http://data.bls.gov/timeseries/LNS12300000
  13. 13. Items to Consider• Seasonal employment can skew results; seasonal adjustments are implemented, but these may overcompensate and distort results• Only measures whether people are working; it does not measure the quality of the jobs or if they are well-suited to workers skills• Revisions can be quite large• Two different surveys - divergence between payroll data and self-reported data• One of the most widely watched reports, the Employment Situation Report gets heavy press coverage and impacts the financial markets
  14. 14. Sources• http://www.bls.gov/cps• http://www.bls.gov/ces• http://www.bls.gov/news.release/empsit.nr0.htm• www.gallup.com• http://globaleconomicanalysis.blogspot.com/

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