Be sceptical of tomorrow’s U.S. jobs numbers

Tomorrow’s much anticipated U.S. unemployment report has analysts buzzing: Will better numbers lead the Fed to raise rates? Will Canada’s newly minted Bank of Canada governor follow suit?

Read: U.S. manufacturing slumps

Edward Lazear of the Wall Street Journal suggests tomorrow’s announcement is something of a red herring. The employment rate, not the government’s unemployment figures are what we need to look at to get a clear picture of U.S. labour market strength.

“The better measure of a strong labor market is the proportion of the population that is working, not the proportion that isn’t. In 2006, 63.4% of the working-age population was employed. That percentage declined to a low of 58.2% in July 2011 and now stands at 58.6%. By this measure, the labor market’s health has barely changed over the past three years,” he says.

Another problem with tomorrow’s report is it won’t account for the unemployed who have given up looking for work.

Read more here.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.