Employers added a relatively modest 114,000 jobs in September, but the unemployment rate registered its biggest drop in nearly two years. What explains the disparity?
The answer lies in the way the two figures are calculated. The monthly payroll number—how many jobs are gained or added in a month—is based on a survey of about 141,000 businesses and government agencies. The unemployment rate and related statistics are based on an separate survey of about 60,000 individual households.
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The business survey is larger and generally more stable. ...
The household survey is more volatile. ... The survey's tally of people with jobs—based on counting the number of people who say they are working, rather than the business survey's count of employees ...
Despite the month-to-month disagreements, however, the two surveys line up well over the longer term. In fact, over the past year, they show almost identical jobs growth. That suggests the September household survey likely overstated the jump in employment, but the July and August surveys likely missed in the other direction. That is consistent with what the business survey is showing: slow, but relatively steady jobs growth.