Tomorrow, the Bureau of Labour Statistics is expected to say that private sector payrolls rose by only 42,000 in August, and that unemployment went up. Scrutiny of the numbers will be intense: both economic, for evidence on the health of the recovery and the Fed’s next move; and political, for insight into the Democrats’ prospects in this autumn’s elections.
But the 42,000 (or rather the likely -100,000 headline) is the difference between the 138,960,000 Americans who were employed in July and however many had jobs in August. A change of 100,000 is 0.07% and a change of 42,000 is 0.03% of the total.
That is why the payrolls release is such a political problem: a change of a few hundreds of a percentage point in the number of employed Americans means the difference between economic policy being perceived as success and as a failure. It’s also why only the trend in payrolls is meaningful from the economic point of view – although that will not stop a dramatic market reaction if tomorrow’s number is out of line.