Nonfarm Employment Adds Jobs, But Data Raises Questions
The National Bureau of Economic Research (NBER) Business Cycle Dating Committee is responsible for identifying official recession calls. Although their process is not explicitly stated, there are four key indicators that are widely believed to be heavily weighed in their decisions: nonfarm employment, industrial production, real retail sales, and real personal income.
According to recent data, nonfarm payroll employment added 162,000 jobs in August, exceeding the forecast of adding 55,000 jobs. The unemployment rate remained unchanged at 4.1%, while the U6 unemployment rate dropped to 7.7%. When adjusted for population growth, nonfarm employment sits at 93.7%.
The data on nonfarm employment is subject to multiple revisions, which can significantly alter the initial estimate. This issue needs to be considered when analyzing this indicator. Additionally, nonfarm employment is not adjusted for population growth, reducing its usefulness in illustrating secular trends.