What to Know About the Jobs Report This Friday

The monthly jobs report is a key indicator of the U.S. economy’s health, influencing stock markets, Federal Reserve policy, and business decisions. Investors and policymakers analyze the data to assess employment trends, wage growth, and economic momentum.

With the next release coming Friday, understanding how the report is compiled helps interpret the numbers beyond the headline figures.

How Data Is Collected

The jobs report is based on two surveys conducted by the Bureau of Labor Statistics (BLS): the Establishment Survey and the Household Survey. Each provides distinct insights into employment trends.

The Establishment Survey, or Current Employment Statistics (CES) program, collects payroll data from about 122,000 businesses and government agencies, covering 666,000 worksites. It tracks nonfarm employment, measuring job gains and losses across industries like manufacturing, healthcare, and retail. However, it excludes agricultural workers, the self-employed, and private household employees, which can create discrepancies with broader labor market conditions.

The Household Survey, or Current Population Survey (CPS), is conducted by the Census Bureau and BLS through interviews with 60,000 households each month. It determines the official unemployment rate by asking respondents about their job status and job search efforts. Unlike the Establishment Survey, it includes self-employed individuals, gig workers, and farm laborers, offering a broader view of labor force dynamics.

Unemployment vs. Underemployment Figures

The headline unemployment rate, known as U-3, includes only individuals actively seeking work. It does not account for those who have stopped looking due to discouragement or other barriers. A broader measure, the U-6 rate, includes discouraged workers, those marginally attached to the labor force, and part-time workers who want full-time employment.

Underemployment is particularly relevant during economic uncertainty, as companies may reduce hours or shift workers to lower-paying roles instead of conducting layoffs. In retail and hospitality, for example, employees may see their weekly hours cut due to seasonal demand fluctuations or weaker consumer spending. This can distort wage growth metrics and create a misleading impression of job market strength if only the headline unemployment rate is considered.

Beyond involuntary part-time work, underemployment includes workers in jobs below their skill level. A college graduate working as a barista or retail associate falls into this category. This trend is especially relevant in fields where job openings do not align with workforce skills, leading to inefficiencies in labor utilization.

Wage Growth Details

Earnings data in the jobs report provides insight into compensation trends across industries and worker demographics. A key figure is average hourly earnings, which tracks wage changes over time. A sustained increase suggests a tightening labor market, where employers must offer higher pay to attract workers. However, wage growth must be considered alongside inflation, as real earnings—adjusted for purchasing power—determine whether workers are actually seeing financial improvement.

Wage trends vary by sector, influenced by factors such as union contracts, minimum wage policies, and shifts in labor demand. Technology and finance roles have historically seen stronger wage growth due to high demand for specialized skills, while sectors like leisure and hospitality, which rely on lower-wage labor, experience more volatility. Legislative changes, such as state-level minimum wage increases or updates to overtime eligibility under the Fair Labor Standards Act (FLSA), can also impact earnings growth, particularly for lower-income workers.

Total compensation includes benefits like employer-sponsored health insurance, retirement contributions, and bonuses. The Employment Cost Index (ECI), a separate measure from the jobs report, accounts for these factors and provides a fuller picture of labor costs. A rising ECI may indicate growing employer expenses, which can affect corporate profitability and hiring decisions.

Labor Force Participation Rate

The labor force participation rate measures the percentage of the working-age population that is employed or actively seeking work. Unlike the unemployment rate, which only considers those looking for a job, this metric reflects broader workforce engagement. A rising participation rate suggests confidence in the labor market, while a decline may indicate structural challenges, such as demographic shifts or barriers preventing people from working.

Demographics play a key role in participation trends. The aging U.S. population has contributed to long-term declines, as more individuals retire. However, participation among prime-age workers (25-54) is a better indicator of economic conditions, as this group is less affected by retirement trends. Gender disparities also impact participation; for example, women’s workforce engagement has been influenced by childcare access, paid leave policies, and remote work availability.

Revisions from Prior Announcements

Initial jobs report figures often undergo revisions as more complete data becomes available. These adjustments can significantly alter perceptions of labor market trends, especially when the initial estimate is unexpectedly strong or weak. The BLS revises its numbers based on updated payroll records from businesses and government agencies to provide a more accurate reflection of employment conditions.

Revisions can affect market sentiment, particularly if a previous month’s job gains are significantly adjusted. For example, if an initially reported increase of 250,000 jobs is later revised to 180,000, it suggests weaker hiring than first thought. Conversely, an upward revision can indicate stronger momentum. These changes also influence Federal Reserve policy, as central bankers assess whether employment trends align with broader economic goals like price stability and sustainable growth.

Sector-Specific Statistics

Breaking down employment data by industry provides deeper insight into which sectors are expanding or contracting. While the headline job growth figure offers a broad snapshot, sector-specific trends reveal shifts in labor demand that influence investment decisions, wage pressures, and economic stability.

Certain industries, such as healthcare and professional services, have shown consistent job growth due to demographic changes and evolving business needs. Healthcare employment has risen as an aging population increases demand for medical services, while technology-driven roles in professional services continue to expand as companies focus on digital transformation. Meanwhile, cyclical industries like construction and manufacturing are more sensitive to economic conditions, with hiring often slowing when interest rates rise or consumer demand weakens.