Economists use the jobs report as a key signpost for tracking the growth of the economy. But, thanks to the government shutdown, Friday’s report is sending muddled signals.
The economy added 204,000 jobs, and unemployment ticked up to 7.3 percent last month, according to the October jobs report released by the Bureau of Labor Statistics.
But the 16-day partial government shutdown blurred the information in the thoroughly picked-over report, making it difficult to tell precisely how well the economic recovery is going, even as the report contained some positive signs, such as an upward revision in the previous two months’ reported payroll numbers.
The monthly jobs report is compiled from two separate surveys, each of which was expected to show some shutdown effects, although the impact was expected to be stronger in the household survey, which asks people to report their employment status during one week each month. (Much more on how the data are collected here.)
The household survey is used to calculate the unemployment rate and was particularly tough to read in the wake of the partial government closure. The reference week for that survey was Oct. 6-12, which was during the shutdown. Workers who say they weren’t working that week but were expected to return to their jobs — i.e., furloughed federal workers — were supposed to be classified as “unemployed, on temporary layoff.”
This caused a particular point of confusion, BLS said in a special section of the October report on the shutdown’s impact. The number of federal workers who were classified as unemployed on temporary layoff rose in October, as expected, but there was also an increase in the number of federal workers who were classified as employed but absent.
“BLS analysis of the data indicates that this group included federal workers affected by the shutdown who also should have been classified as unemployed on temporary layoff. Such a misclassification is an example of nonsampling error and can occur when respondents misunderstand questions or interviewers record answers incorrectly,” the agency said. It does not change these responses.
The other survey, the establishment survey, asks businesses to count anyone who received pay during the pay period that includes the 12th of the month as employed. Because the furloughed federal employees will receive back pay, they wouldn’t be counted as unemployed here. But private contractors who were out of work due to the shutdown would have. However, BLS noted, “There were no discernible impacts of the partial federal government shutdown on the estimates of employment, hours, and earnings from the establishment survey.”
The Office of Management and Budget separately detailed the economic impact of the shutdown in a 27-page report released on Thursday. The shutdown and debt-ceiling brinkmanship cost the economy 120,000 new private-sector jobs during the beginning of October and will shave between 0.2 and 0.6 percentage points off gross domestic product growth in the fourth quarter, the report said, citing the White House Council of Economic Advisers as well as private forecasters.
Another impact of the shutdown on the October jobs numbers? They were a week late.