by Jared Levy on June 7th, 2010
…Friday’s nonfarm payrolls report was much worse than expected, hence the market’s very bearish reaction. Only about 20,000 “real” permanent jobs were added in the month of May. The Bureau of Labor Statistics noted that 411,000 of the 431,000 jobs were temporary positions associated with the 2010 Census.
One of the statistics that bothers me is the drop in the unemployment rate to 9.7%, because it can be misleading. You have to look at the data closely and be careful of the headlines, which may have it at least partially wrong. Here is an inside look at the numbers:
One of the keys here is to examine the change in labor force, which is the divisor of the number of unemployed workers and the participation rate.
322,000 people “left” the work force in May, which means the entire pool of Americans willing and able to work for pay and currently available to work shrank. Of the total population (not the Labor force), 58.7% of Americans are employed; this number was relatively unchanged from last month.
In May, the civilian labor force participation rate…
