Friday, August 3, 2012

Why Did Unemployment Rate Increase?

From the WSJ.com:

The U.S. unemployment rate rose to 8.3% in July and a broader measure ticked up to 15%, even as the economy added 163,000 jobs.

Why the increase?

The key reason is because the two numbers come from separate reports. The number of jobs added — the 163,000 figure — comes from a survey of business, while the unemployment rate comes from a survey of U.S. households.... the household survey was telling a darker tale than the poll of establishments...

150,000 people left the labor force, lowering what is known as the participation rate...

A further worrying sign came in the count of persons counted as employed, which fell by 195,000 last month.

Meanwhile, the broader unemployment rate, known as the “U-6″ for its data classification by the Labor Department, was up to 15% in July....

In July, the increase in the U-6 rate was driven by a jump in both the number of part-time workers who would prefer a full-time job and the number of discouraged workers.
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Link: http://blogs.wsj.com/economics/2012/08/03/why-did-unemployment-rate-increase/

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