What are we to make of the January job numbers? Unemployment shrank from 9.4% to 9.0% but the economy only created 36,000 jobs. According to the report, the number of unemployed persons decreased by 600,000. But the report also says that the number of non-farm added in the U.S. last month was only 36,000. Did I miss a 564,000 employee-firing farming boom in January?
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Actually the confusion reflects the data collection methods that go into these reports. The report encompasses data from two surveys: Household Survey Data, which gives you the unemployment rate, and Establishment Survey Data, which gives you the jobs created number. The former surveys people and counts those looking for work, the latter surveys businesses and counts how many workers they hired.
Add to that the fact that the unemployment rate is defined as the percentage of people without a job who, actively looking for work, and currently available for work. So the unemployment rate can drop simply by folks ceasing to look for work. Mark Zandi from Moody's and CNBC's Steve Liesman went through the numbers on the show today.
If you want some more depth check out the explanation NPR's Planet Money has on this.