The "smoother," the bumpier when it comes to job numbers

Posted at 3:31 PM on November 17, 2011 by Annie Baxter (0 Comments)
Filed under: Jobs & unemployment

As we've noted in an earlier post, the unemployment rate in Minnesota dropped last month to 6.4 percent (down from 6.9 percent in September). Meanwhile, payroll employment fell by 6,100 jobs.

How can there be fewer jobs AND lower unemployment? If you're like me, those contradictory pieces information may scramble your brain.

Here's what's up. There's a lot of reasons why the numbers can seem contradictory, but in this case there's funky stuff going in the way the BLS (U.S. Bureau of Labor Statistics) "smoothes" the numbers. That's true both of the unemployment rate and of the payroll employment number, which, you may recall, come from two totally different surveys.

The unemployment rate got pulled down in part because the effects of the state government shutdown in July were still swirling around in the numbers. Some of those workers' return to work didn't show up until the October report, partly because of how the BLS "smoothing" process captures changes in the job market. Weird, right?

On the payroll employment side of things, there's another "smoothing" process that goes on. And state labor market analyst Steve Hine is quick to point out that those numbers, which he's no longer in charge of crunching, frequently have to be revised by BLS. Case in point: the 7,400 job losses initially reported in September got revised down to 1,900.

Sounds like Hine's not a fan of the smoothing techniques.

It may be frustrating that these numbers can seem so imprecise and fraught with problems. But that's why it's important to look at long-term trends, not just a month's worth of numbers.

So it's worth noting that the unemployment rate and payroll employment have both been improving, albeit sluggishly.

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