How Is the Monthly Jobs Report Calculated?

The health of the United States economy is regularly assessed through various indicators, with the monthly jobs report standing out as a significant measure. Officially known as the “Employment Situation Report,” this publication offers a comprehensive snapshot of the nation’s labor market. Released early each month by the Bureau of Labor Statistics (BLS), it provides valuable insights for policymakers, businesses, and the public. The report’s findings help inform decisions from monetary policy adjustments by the Federal Reserve to business hiring strategies and individual financial planning.

Sources of Data

The monthly jobs report relies on data from two distinct surveys: the Household Survey and the Establishment Survey. Each survey gathers unique information, contributing to a holistic view of employment trends.

The Household Survey, formally known as the Current Population Survey (CPS), is conducted by the U.S. Census Bureau for the BLS. Its purpose is to collect data on the labor force status of the civilian non-institutional population aged 16 years and over. Approximately 60,000 households across the nation are interviewed monthly, with a rotating sample design. Information gathered includes whether individuals are employed, unemployed, or not in the labor force, along with demographic characteristics, hours worked, and reasons for unemployment. Data collection refers to employment status during a specific reference week, typically the week that includes the 12th day of the month.

The Establishment Survey, also known as the Current Employment Statistics (CES) program or the payroll survey, collects data directly from non-farm businesses and government agencies. This BLS survey samples approximately 122,000 to 144,000 businesses and government agencies monthly, representing about one-third of total non-farm employment. The survey focuses on collecting data regarding the number of employees on payrolls, average weekly hours worked, and average hourly earnings. Data collected from establishments pertains to the pay period that includes the 12th day of the month. This survey provides information about jobs rather than individuals; a person holding multiple jobs would be counted multiple times.

Deriving Key Employment Figures

Data from the Household and Establishment Surveys are processed to derive the primary figures presented in the jobs report. Each metric offers a distinct perspective on the labor market’s condition.

The unemployment rate is a widely recognized figure from the Household Survey. To calculate this, individuals are classified into one of three categories: employed, unemployed, or not in the labor force. An individual is “employed” if they worked for pay, profit, or in a family business, or were temporarily absent from work during the reference week. A person is “unemployed” if they had no job, were actively looking for work in the prior four weeks, and were currently available for work.

The “labor force” encompasses both employed and unemployed individuals. Those who are neither employed nor actively seeking work, such as retirees, students, or discouraged workers, are “not in the labor force.” The unemployment rate is calculated by dividing the number of unemployed individuals by the total labor force and multiplying by 100.

Non-farm payroll employment is a prominent figure from the Establishment Survey. This metric quantifies the total number of paid employees on the payrolls of non-agricultural businesses and government entities. This count measures jobs, not unique individuals, so a person with two jobs would contribute two to the payroll total. Exclusions from this figure include farm workers, private household employees, and self-employed individuals.

The labor force participation rate, also from the Household Survey, indicates the proportion of the civilian non-institutional population that is either employed or actively seeking employment. This rate is calculated by dividing the total labor force by the civilian non-institutional population aged 16 and over, then multiplying by 100. This figure provides insight into the overall engagement of the working-age population in the labor market.

Average hourly earnings and average weekly hours are additional metrics from the Establishment Survey. Average hourly earnings represent the average amount of money private employees earn per hour, encompassing gross pay including premium pay for overtime and late-shift work. Average weekly hours indicate the typical number of hours worked per week by employees. Both measures offer insights into wage growth and labor utilization trends.

Adjustments and Revisions

After initial data collection, the jobs report undergoes statistical adjustments and revisions. These processes enhance its accuracy and provide a clearer picture of underlying economic trends.

Seasonal adjustment removes predictable seasonal patterns from the data. Economic activities often show regular fluctuations; for instance, retail employment increases during the holiday season, and construction activity may slow in winter. By using historical data to identify and remove these seasonal influences, the BLS reveals underlying employment trends. This adjustment helps in making meaningful month-to-month comparisons.

Benchmarking is an annual process that refines the Establishment Survey’s employment figures. This adjustment aligns the survey’s sample-based estimates with more comprehensive employment counts, primarily from state unemployment insurance (UI) tax records. Nearly all employers covered by UI laws report employment and wage information quarterly, providing a near-universal count of jobs. Benchmarking corrects for sampling errors and accounts for business births and deaths difficult to capture promptly in monthly surveys. This revision can lead to substantial changes in previously reported historical employment levels.

Initial jobs report figures are preliminary and subject to revisions in the months following their release. These revisions occur because more complete data becomes available as additional survey responses are received. The BLS revises data for the prior two months with each new report. For example, the collection rate for initial publication might be around 68%, increasing to nearly 93% by the third publication.