Tags: Job numbers | statistical noise | employment | labor

NYT: Job Numbers Can Contain Much 'Statistical Noise'

By    |   Friday, 02 May 2014 10:25 AM

Financial markets participants got quite excited by the larger-than-expected 288,000 April payroll increase and the decline in unemployment to 6.3 percent reported Friday, though markets haven't moved much yet in reaction.

But New York Times writers Neil Irwin and Kevin Quealy say investors and analysts put too much stock in numbers of questionable accuracy.

"We obsess far too much on the Labor Department’s monthly jobs report," they wrote before the April numbers were even released.

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Irwin and Quealy point out that a weak jobs gain of say 64,000 could have roiled financial markets.

"But what if all the worries were based on nothing more than random statistical noise? What if the apparent decline in job growth came from the inherent volatility of surveys that rely on samples, like the survey that produces the Labor Department’s monthly employment estimate?"

Remember that job numbers are frequently revised in future months. Indeed, the March payroll gain was lifted to 203,000 Friday, up from the initial estimate of 192,000.

Investors can miss the forest for the trees by looking at monthly job numbers instead of long-term trends, Irwin and Quealy note.

As for the enthusiasm over the April data, "the economy is gathering momentum after the bad winter,” Michael Gapen, senior U.S. economist at Barclays, told Bloomberg.

"The unemployment rate will stay in its downward trend, which means tapering will continue." He was referring to the Fed's curtailment of its bond purchases.

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Financial markets participants got quite excited by the larger-than-expected 288,000 April payroll increase and the decline in unemployment to 6.3 percent reported Friday, though markets haven't moved much yet in reaction.
Job numbers, statistical noise, employment, labor
285
2014-25-02
Friday, 02 May 2014 10:25 AM
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