The Employment Report

Importance: Highest.
Published by: Bureau of Labor Statistics, U.S. Department of Labor.
Frequency: Monthly.
Release Time: First Friday of the month at 8:30 ET
Coverage: Prior Month.
Web: http://stats.bls.gov/news.release/empsit.toc.htm

Prior to the Employment Report we have only received the Auto Sales and Purchasing Managers Index and analysts have relatively little information to use in forecasting the direction of the economy. The monthly Employment Report is the most timely and broad indicator of economic activity and overall economic health. It provides a wealth of data on almost all sectors of the economy. The report is made up of two separate reports which are the results of two separate surveys.

Firstly, the Household Survey covers roughly 60,000 households and 120,000 people and tells us the unemployment rate. For the purposes of this survey, a person is considered unemployed if they do not have a job and are actively seeking employment.

Secondly, the Establishment or Payroll Survey covers 375,000 businesses, producing the nonfarm payrolls, average workweek, and average hourly earnings figures. Being larger and more comprehensive, the establishment survey is more closely watched. Payrolls are broken down into sectors including manufacturing, mining, construction, services, and government. The manufacturing sector is closely followed as it often leads the business cycle. A person is considered employed if they are on a firms payroll for any part of the pay period that includes the survey week. Federal government employment is an exception, being measured at the end of each month.

The average workweek is an important determinant of such monthly indicators as industrial production and personal income. Average workweek also reflects labor market conditions. A rising workweek early in the business cycle may indicate that employers are preparing to boost their payrolls, while late in the cycle a rising workweek may suggest that employers are having difficulty finding employees. Average earnings are used to gauge potential inflation. Broadly speaking, the employment report helps to forecast many other indicators. For example, a weak Employment Report can suggest a disappointing Retail Sales Report.

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