The Bureau of Labor Statistics (BLS) released their latest Employment Situation Summary last Thursday and it again beat analysts’ expectations in a big way. 4,800,000 jobs were added in June, and the unemployment rate fell to 11.1% from 13.3% last month. Again, excellent news as the unemployment rate fell for the second consecutive month. However, there’s still a long way to go.
>>What about a supposed misclassification?
The BLS addressed this at length in a blog post last week, and concluded by saying, “Regardless of the assumptions we might make about misclassification, the trend in the unemployment rate over the period in question is the same; the rate increased in March & April and eased in May.”
>>Does the shutdown of parts of the economy skew the unemployment numbers?
Because the uniqueness of 2020 impacts the employment situation in so many ways, each jobs report is now examined with a microscope to make sure the headlines generated by the report accurately convey what’s happening in the job market.
One such analysis is done by Jed Kolko, Chief Economist at Indeed, with his “core unemployment rate.” He believes the extraordinary number of people in the “temporary” unemployed category confuses the broader issue of how many people have permanently lost their job.
The bad news is that his analysis reveals that the number of permanently unemployed is still rising (from 4.6% in April to 5.9% last month). The good news, however, is when you use his methodology to look back at the Great Recession, today’s “core unemployment rate” is significantly lower (5.9% versus 10.5% in April 2010).
Last week’s jobs report was much better than most expected. However, we should remain cautious in our optimism.
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