Monthly Jobs Reports Are Watched Closely, But How Meaningful Are They?
STEVE INSKEEP, HOST:
Later this morning, the Labor Department releases its monthly jobs report. Now, market analysts believe that about 180,000 jobs were added to payrolls in July. The payroll number is closely watched by Wall Street and the Federal Reserve. But as NPR's Yuki Noguchi reports, economists are not so sure how much it means.
YUKI NOGUCHI, BYLINE: Alan Blinder, a professor at Princeton and a former Fed vice chairman, says there's something most Americans don't know about the labor market.
ALAN BLINDER: Every single month, 5 million jobs get destroyed - either people quitting or getting fired. And a little more than 5 million get created.
NOGUCHI: So when job numbers fluctuate by 100,000, in the scheme of things, that's not much. Blinder says the numbers are more meaningful when you look at them over the long run - a yearly average, for example. The monthly numbers garner a lot of attention anyway because they're the best data available to get a snapshot of where the labor market is. Andrew Chamberlain, chief economist for job site Glassdoor, agrees the net job growth headline isn't necessarily significant.
ANDREW CHAMBERLAIN: The monthly jobs report has very little day-to-day impact on people's lives. Unless you work in finance, it essentially has no impact on you at all.
NOGUCHI: Whereas, he says, the numbers you don't hear about - the creation and destruction of jobs - are, in a macro-economic, sense very important.
CHAMBERLAIN: That job churning is hugely important for prosperity over time. For the economy to continue to progress, we need to lead unproductive firms contract and die off. And we need to let innovative, well-run companies expand.
NOGUCHI: Chamberlain says this month, he expects the job report's importance to be mostly psychological.
CHAMBERLAIN: Economically, not that important but psychologically essential as we get close to a presidential election.
NOGUCHI: If the report affects how people feel about the economy, it might affect how they vote. Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright NPR.