Unemployment & Payroll Jobs

The "unemployment rate" is a lagging indicator which rises and falls following some change in economic activity. Consequently, it is not considered to have a significant influence on interest rates.  

On the other hand, the "employment rate" is considered one of the most significant economic indicators providing information on employment, the average workweek, and hourly earnings. It is considered a coincident indicator of economic activity.

The unemployment rate has steadily declined over the last year and has consistently been running below what economists believe to be the "natural rate"  - a stabilized rate (approximating 5%) at which sustained unemployment can exist without sparking inflation.  

Impact on Interest Rates

• A declining unemployment rate trend is considered inflationary  causing bond prices to drop and interest rates and yields to rise.

Employment - Payroll Jobs

The "employment rate" is considered one of the most significant economic indicators providing information on employment, the average workweek, hourly earnings, and the unemployment rate. It changes direction with the economy and is therefore considered  a coincident indicator of economic activity.

This indicator is gleaned from data extracted from the following categories:

Goods-Producing

1. Manufacturing
2. Construction
3. Mining

Service-Producing

1. Transportation and Public Utilities
2. Wholesale Trade
3. Retail Trade
4. Finance, Insurance, and Real Estate
5. Services
6. Government

Payroll jobs help predict other economic indicators such as housing starts, manufacturing and industrial production activity, total payroll and personal income. 

Payroll data is subject to sizeable revisions yet is of moderate importance.  In the bond market, a weak report is viewed favorably while a strong report has an inverse impact.

Graph   Regional & State   Labor Force Statistics   Employment