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Home Publications Blogs CEPR Blog Jobs Data Flash: Shutdown Edges Unemployment Rate up to 7.3 Percent

Jobs Data Flash: Shutdown Edges Unemployment Rate up to 7.3 Percent

Written by Dean Baker   
Friday, 08 November 2013 08:49

The October employment report showed a sharp divergence between the household and the establishment survey. The establishment survey showed a surprisingly strong gain of 204,000 jobs in October, in addition to upward revisions of 60,000 to the prior two months data. Job gains were broadly spread across industries. Especially noteworthy was a 19,000 increase in manufacturing employment, the largest gain in the sector since an increase of 23,000 in February.

The picture in the household survey was much bleaker. The unemployment rate edged up to 7.3 percent, but more importantly the employment to population ratio (EPOP) dropped 0.3 percentage points to 58.3 percent, as more 700,000 workers reported leaving the labor force. This put the EPOP only slightly above the 58.2 percent low for the downturn reached in July of 2011. Much of the reason for the deterioration in the picture in the household survey was the government shutdown, with the number of people reporting that they were unemployed due to temporary layoffs rising by 448,000. However even all these workers are added to the employed, the EPOP still would have edged down to 58.5 percent, as there still would have been a decline of 250,000 in the size of the labor force.

When the two surveys diverge like this the establishment survey usually turns out to be the one closer to the underlying reality. It will be very bad news if that is not the case here.

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