Economy: Employment Situation Report for July 2020

The Employment Situation Report for July 2020 was released by The Department of Labor's Bureau of Labor Statistics this morning:

Nonfarm Payrolls (month-to-month change)
Predicted: +1,500,000
Actual: +1,763,000

U-3 Unemployment Rate (Headline)
Actual: 10.2%
Previous Month: 11.1%
12 Months Previous: 3.7%

U-6 Unemployment Rate*
Actual: 16.5%
Previous Month: 18.0%
12 Months Previous: 6.9%

Average Hourly Earnings (month-to-month change)
Predicted: Unchanged
Actual: +0.239% (+$0.07)

Average Hourly Earnings (year-on-year change)
Predicted: +5.0%
Actual: +4.78% (+$1.34)

Average Weekly Earnings (month-to-month change)
Actual: -0.05% (-$0.51)

Average Weekly Earnings (year-on-year change)
Actual: +5.39% (+$51.84)

Civilian Labor Force Participation Rate: 61.4%
Previous Month: 61.5%
12 Months Previous: 63.0%

Average Workweek
Predicted: 34.5 hours
Actual: 34.5 hours

Economist, academics, central bankers and investors pay very close attention to the monthly Employment Situation report as it offers penetrating insight as to the current and near-future state of the overall U.S. economy. If a) Americans are earning more money and b) the economy is creating new jobs, this typically translates to more money being pumped into the economy (and vice versa.)

The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

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From Today's Report:

"...The change in total nonfarm payroll employment for May was revised up by 26,000, from +2,699,000 to +2,725,000, and the change for June was revised down by 9,000, from +4,800,000 to +4,791,000. With these revisions, employment in May and June combined was 17,000 higher than previously reported..."

"...Coronavirus (COVID-19) Impact on July 2020 Establishment and Household Survey Data

Data collection for both surveys was affected by the coronavirus (COVID-19) pandemic. In the establishment survey, approximately one-fifth of the establishments are assigned to four regional data collection centers for collection. Although these centers were closed, interviewers at these centers worked remotely to collect data by telephone. Additionally, BLS encouraged businesses to report
electronically. The collection rate for the establishment survey—which had a longer-than-average collection period in July—was 78 percent, higher than the average for the 12 months ending in February 2020. The household survey is generally conducted through in-person and telephone interviews. However, for the safety of both interviewers and respondents, the vast majority of interviews were done
by telephone, with in-person interviews conducted on an extremely limited basis in some areas of the country. The household survey response rate was 67 percent, up from the rate of 65 percent in June but much lower than the average rate of 83 percent for the 12 months prior to the pandemic.

In the establishment survey, workers who are paid by their employer for all or any part of the pay period including the 12th of the month are counted as employed, even if they were not actually at their jobs. Workers who are temporarily or permanently absent from their jobs and are not being paid are not counted as employed, even if they are continuing to receive benefits.

In the household survey, individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the survey reference week (July 12th through July 18th). Workers who indicate they were not working during the entire survey reference week and expect to be recalled to their jobs should be classified as unemployed on temporary layoff. As in recent months, a large number of persons were classified as unemployed on temporary layoff in July.

Since March, household survey interviewers have been instructed to classify employed persons absent from work due to temporary, coronavirus-related business closures or cutbacks as unemployed on temporary layoff. BLS and Census Bureau analyses of the underlying data suggest that this group still may include some workers affected by the pandemic who should have been classified as unemployed on
temporary layoff.

The share of responses that may have been misclassified was much smaller in June and July than in prior months.

For March through June, BLS published an estimate of what the unemployment rate would have been had misclassified workers been included. Repeating this same approach, the overall July unemployment rate would have been about 1 percentage point higher than reported. However, this represents the upper bound of our estimate of misclassification and probably overstates the size of the misclassification error..."

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Chart: U-3 (Headline) Unemployment Rate

July 2020 Update

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Chart: Nonfarm Payroll Employment

July 2020 Update

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* = The U-6 Unemployment Rate is defined as:

"Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force."

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