Data from the US labor market on the second day?

A shocking at first glance report from the American labor market in the form of NFP may have a second bottom. This is what the BLS points out in the last paragraph of its monthly report. Additionally, the U-3 and U-6 unemployment rates show a divergent direction. So, where is the US labor market headed and can we clearly state what is happening there?

Such a huge discrepancy between the market consensus in the form of 185 thousand. for NFP, and a reading of 517 thousand. stunned the markets on Friday. The US dollar, looking through the prism of its index, increased by 1,23 percent, which was the best day for USD since October 5, 2022. Silver fell by over 4 percent, and had its worst day since February 2, 2021. Gold in turn, it was discounted by almost 2,5 percent, which was the biggest daily drop since June 13, 2022.

What happened to the US data?

The last paragraph in the report published by BLS tells us that starting with January 2023 data, updated population estimates have been incorporated into the household survey. Population estimates for the Household Survey are compiled by the US Census Bureau. Each year, the Census Bureau updates the estimates to reflect new information and assumptions about population growth. The change in population reflected in the new estimates is due to adjustments for net international migration, updated vital statistics and improvements in estimation methodology.

As usual, the BLS will not revise the official household survey estimates for December 2022 and prior months. Data users are cautioned that these annual population adjustments may affect the comparability of household data series over time.

According to the tables published by the BLS, employment in December increased by only 84.

U-3 and U-6 unemployment

In the United States, unemployment is measured in six ways, with the U-3 unemployment rate (total unemployed as a percentage of the civilian labor force) being the official unemployment rate. The unemployment rate measured in this way fell to the lowest level since 1969 and amounted to 3,4 percent. The U-3 ratio is often criticized for being too simple. Many economists feel they are missing the whole picture because the U3 only includes people who are actively seeking employment. In fact, it excludes people who only work part-time but want to work full-time, and discouraged workers. These are unemployed people who are able to work but have not looked for work in the last four weeks.

The U-6 is a broader picture of the U.S. labor market as it includes anyone who has been looking for a job in the last 12 months but has not been able to get a job and has not looked for a job in the last four weeks. It also covers anyone who has gone back to school, becomes disabled, as well as those who are underemployed or working part-time.

All in all, while the U-3 unemployment rate fell to 3,4%, the U-6 rate rose to 6,6%. In turn, the gap between the U-6 and U-3 increased to 3,2 percent, which is the largest discrepancy since September 2022. So it looks like it may be hard to estimate the condition of the US market in the near future. jobs, which is a key market.