The U.S Bureau of Labor Statistics’ monthly jobs report, released the first Friday of each month, has become a must read for any executive. But while business news pundits often obsess over the report’s headline figures, the real value for talent-minded executives requires a little more digging.
Here are five things executives should do when interpreting the monthly jobs report data.
1. Don’t simply read the first page.
The first page of the report contains basic employment and unemployment numbers, which act as surface-level insight into the data. “All of this information is so situated in a context, and I feel like the first page is very context-less,” said Grey Litaker, data scientist at Human Capital Media, publisher of Talent Economy.
Aggregating data together on that first page means that employment based on sectors and the pay they provide doesn’t appear. For example, when looking at the average earnings of all employees, it can include pay ranging from that of a part-time, seasonal worker to a CEO. The aggregate data, however, isn’t the whole story. “Beware of aggregate, and skim the whole report,” Litaker said.
2. Don’t expect predictions to hold true.
When numbers don’t live up to expectations, it doesn’t necessarily mean the economy is doomed. “I would caution anyone who is looking at this report not to make what I like to call ‘The Weather Channel fallacy’ of data,” Litaker said, “which is to treat a forecast, or something that is a constantly changing system, as if a snapshot is going to be entirely accurate of the minute-by-minute experience.”
3. Examine trends instead of monthly data.
One report on its own doesn’t tell the whole story, and you should never put too much emphasis on a single reading, said Jim O’Sullivan, chief U.S. economist at High Frequency Economics, an independent economics research firm in Valhalla, New York. “The data can be quite volatile from month to month.” Instead, he advised looking at trends like employment growth over three months or more to get a sense of underlying trends. For example, the employment growth reported for May 2016 was weak at 38,000, but employment growth has been much higher in surrounding months, like 151,000 in August.
4. Create your own unique context when viewing the data.
These reports are misleading on their own; they require context. And CEOs need to create their own context, according to Litaker. For example, a CEO of a company that makes steel toe boots for loggers should be concerned with new job creation in the logging industry. “You have to create your own context, and you have to get to the back of the report to begin to find it. It’s not in the first two pages,” Litaker said.
5. Examine specific sector reports for deeper insights.
CEOs should compare their own company or sector to national trends, which will help determine what they should pay employees to retain their talent, O’Sullivan said. And the JOLTS report, or Job Openings and Labor Turnover Survey, can help with this even more. This report, which typically comes out the second Tuesday of each month, shows turnover rates, quit rates by industry and nationally, and more from two months prior. For instance, a higher number of people quitting their jobs might speak to people’s confidence that they will be able to find a new one, while fewer people quitting might suggest fewer opportunities. “I think all those things have to be taken into account as an employer decides how much to pay workers,” O’Sullivan said.
Lauren Dixon is an associate editor at Talent Economy.