Tomorrow's Jobs Report Will Look Far Better Than It Really Is
In the past two weeks initial unemployment claims soared by nearly 10 million. That's enough by itself to cause a huge spike in the unemployment rate.
The monthly jobs report comes out on the first Friday of every month. That's tomorrow, April 3.
But tomorrow's numbers will be wildly wrong because the bulk of the claims and layoffs fall outside the BLS Reference Period.
The establishment survey provides information on employment, hours, and earnings of employees on nonfarm payrolls; the data appear in the "B" tables, marked ESTABLISHMENT DATA. BLS collects these data each month from the payroll records of a sample of nonagricultural business establishments. Each month the CES program surveys about 145,000 businesses and government agencies, representing approximately 697,000 individual worksites, in order to provide detailed industry data on employment, hours, and earnings of workers on nonfarm payrolls. The active sample includes approximately one-third of all nonfarm payroll jobs.
Household survey. The sample is selected to reflect the entire civilian noninstitutional population. Based on responses to a series of questions on work and job search activities, each person 16 years and over in a sample household is classified as employed, unemployed, or not in the labor force.
For both surveys, the data for a given month relate to a particular week or pay period. In the household survey, the reference period is generally the calendar week that contains the 12th day of the month. In the establishment survey, the reference period is the pay period including the 12th, which may or may not correspond directly to the calendar week.
No Manipulation, Just Bad Timing
I expect to see manipulation claims tomorrow from people who do not understand how these surveys operate.
The Establishment Survey provides the baseline jobs number. The Household Survey determines the unemployment rate. The reference period for both is the week of the 12th.
Weekly Initial Claims
Based on the reference date the surge in the unemployment rate that's baked into the cake will be barely visible in tomorrow's report.
The report for April, to be published on May 1, will contain almost all of what's happening now.
So don't be shocked at how good tomorrow's look. They are guaranteed to mislead.
In the April report, I expect to see the unemployment rate to surge to at least 12% and more likely something closer to 20% or higher.
For more discussion of initial continued claims, please see Unemployment Claims More Than Double Last Week's Record Total.
Mike "Mish" Shedlock