The jobs report is a snoozy slice of data that excites or depresses investors, ultimately making the stock market move accordingly. The Bureau of Labor Statistics releases these reports monthly on their plain-jane, early-’90s looking website, and it paints a picture of how job seekers have fared in the past month.
Mind you, the jobs report is an estimate and is subject to further revision in the future. Nevermind all of that for second, we’ll get back to that later.
This month’s job report in plain English
The government guesses or estimates that nonfarm payroll (everyone except farm workers) went up by 222,000 in June, far exceeding previous private estimates.
The Bureau also revised April and May numbers upward, suggesting that employment gains in previous months were 47,000 more than they previously reported. With these new numbers in mind, “job gains have averaged 194,000” in the past three months.
Are these numbers good?
These numbers aren’t too shabby, but it’s important to put the numbers in perspective.
“One hundred thousand jobs need to be added to keep up every month to break [even]” said Mark Hamrick
Senior Economic Analyst at Bankrate.com. “One hundred thousand jobs added means we’re at a standstill, only absorbing the natural growth rate of the population.”
The job report also reported wage growth coming in at annual increase of 2.5 percent. That’s low by historical standards, and it indicates that pay remains stuck in neutral.
What else should I know about these numbers?
Raw statistics aren’t everything because they don’t tell us about about job quality. We’ve seen enormous job growth since the end of the Great Recession, but good jobs still aren’t easy to come by for millions of workers.
“Job quality is very important, and a measure of that is wage growth, and so far, wage growth has been subpar during the recovery,” Hamrick said. “Also, sustainability is important — for many people, the gig economy has become a path forward to making a living.”
It’s all a guessing game
In the grand scheme of things, it’s important to remember that the jobs report is guessing game because 5 to 6 million people transition in any given month.
“That means the margin of error for jobs report is basically the size of the payroll gain and is therefore subject to further revision,” Hamrick said.
So why is this all important?
The jobs report is an important canary in the coal mine for the job market and the wider economy. Canaries were often used in coal mines because they would drop dead from toxic gases before workers would, giving the miners a chance to escape.The jobs report is exactly that — a tiny snapshot of the economy that can warn us of impending economic doom.
So unless you’re the heir to a major fortune and don’t have to work, the jobs report is something that should be on your radar. Our Millennial Money Survey found that the average millennial expects to have nine jobs over the course of their career and lacks loyalty to their employer. Therefore, in many ways, the typical millennial is always on the hunt for a new job, so stayed tuned to the trends and see whether now is a good time to search for a new job.
Have something to add to this story? Comment below or join the discussion on Facebook.
Header image: Getty Images