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Opinion: Beware the Monthly Jobs-Report Chatter

Wall Street Journal (04/05/13) Edward P. Lazear

The U.S. Department of Labor’s monthly jobs report, released today, contains some valuable information, according to this opinion piece, but should be parsed carefully, because the numbers are merely estimates, “are subject to significant revision, are volatile, and they tell us very little about the direction of the labor market.” The data used in the report come from two sources—household data and “job creation” numbers from businesses. Quite often the household numbers and business numbers differ by more than 50%, so while the household data might suggest 100,000 jobs have been created, the business data might indicate 200,000 jobs have been created. Over the course of a year, however, the two data sets are very closely aligned.

Although the business numbers are widely considered to be more accurate, their accuracy in any given month is questionable. For example, during the past year, 164,000 jobs were reported to have been added to the economy each month on average. However, the error rate would put actual job growth during that period at between 96,000 and 232,000 jobs in the average month.