The US employment report is actually a compilation of two separate surveys, with many layers of detail about the US labor market (AFP photo)

Washington (AFP) – The US employment report is a key government data release, closely watched for signs of the health of the economy.

In April, the massive damage done by the coronavirus pandemic will become clear.

The report is actually a compilation of two separate surveys, with many layers of detail about the US labor market beyond the two main headline figures: the unemployment rate and payroll figures.

Here is a breakdown of the main components:

– Households and businesses –

The Labor Department’s Bureau of Labor Statistics (BLS) uses two separate surveys each month to compile the report known officially as “The Employment Situation.”

Both surveys cover the week that includes the 12th day of the month, which in March was before many of the most strict coronavirus lockdowns went into effect.

The household survey gathers information on civilian employment status and details about age and gender from about 60,000 homes nationwide and comprises about 100,000 individuals, including self-employed people working on farms or in family businesses.

The establishment survey focuses on 145,000 businesses and government agencies to calculate nonfarm employment, hours worked and earnings by industry. The data are revised over for two months after the initial release as more accurate and complete information is provided.

– Unemployment rate –

The unemployment rate, calculated from the household survey, is the percentage of people over 16 years old who are in the labor force but were not paid for work during the reference week — which includes the 12th of each month.

To be in the labor force, a person must be working, or unemployed but available for work and actively looking for a job within the prior four weeks. Someone who is retired or has stopped looking for work is not considered to be in the labor force.

Workers who are furloughed or laid off due to the coronavirus are considered unemployed even if they continue to receive benefits like health insurance.

An individual paid at least one hour is counted as employed, but someone with multiple jobs is only counted once in the household survey.

– Jobs gained or lost –

The other key data point is the net change in “nonfarm payrolls” from the establishment survey, which is the difference between the number of jobs added and the number of jobs cut in the month.

Workers who are paid by their employer for any part of the pay period that includes the 12th of the month are counted as employed, even if they were not actually at their jobs.

But those who are absent from their jobs, temporarily or permanently, who did not receive pay are not counted as employed even if they continue to receive benefits.

An individual with multiple jobs is counted multiple times in the establishment survey.

– Other key data points –

The report includes a host of other data, including breakdowns of employment by industry, age, sex, race and ethnicity.

It also has multiple ways to calculate unemployment: the official rate is known as U-3, but U-6 is the broadest measure of joblessness which includes those who are working part time but prefer a full-time job.

It also includes people only “marginally attached” to the labor force, meaning they want a job but have become discouraged and stopped looking for work.

Average hours worked and average hourly earnings are useful to gauge how tight the labor market is, and are an early indication of whether inflation pressures are rising or falling.

The labor force participation rate is the percentage or people in the workforce compared to the overall population, reflecting the changing size of the pool of available workers. It is expected to decline sharply in April.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.