Bureau of Labor Statistics, What It Does, And Its Impact
How the BLS Can Help You Get Ahead
The Bureau of Labor Statistics is the premier research arm of the Department of Labor. It collects, analyzes and reports on a wide range of employment, unemployment and price statistics. These reports are critical aids to taking the pulse of the U.S. economy.
The most important statistic is the Jobs Report. Every month, the BLS reports on how many jobs have been created. It also details which sectors of the economy are hiring.The BLS conducts the Employment Report through a survey of businesses.
One section of the Employment Report, the manufacturing jobs is one of the most important leading economic indicators. Why? When demand starts to soften in a recession, manufacturers are most likely to feel it first. To meet their profit margins, which are often razor-thin, they start reducing shifts. A reduction in manufacturing jobs is often the first sign of an impending recession.
The general Jobs Report is not as much a leading indicator as the manufacturing jobs report. That's because most employers resist layoffs as long as possible. They will cut advertising and other expenses before going through the pain of layoffs. Manufacturers, on the other hand, must cut shifts if they don't have the work.
The BLS provides a variety of analyses and reports from the data collected for the Employment Report. Here's a summary:
- State, county and local employment.
- Worker characteristics.
- Employment 10-year projections.
- Monthly data on job openings, hires, and separations.
- Annual data on employment and wages by occupation and industry.
- Longitudinal studies tracking the lives and labor market experiences of six groups of men and women.
- Quarterly reports on job gains and job losses statistics.
- International employment comparisons for 10 countries.
- Various analyses of specific topics.
The Employment Report includes the unemployment statistics. This data is collected from monthly household surveys. To be counted among the unemployed, the jobless have to be actively searching for work. Unemployment is a lagging indicator. That's because the last thing employers do after a recession is hire new full-time workers. Therefore, the unemployment rate may not decline until months after the economy starts to recover.
The BLS provides data on the age, sex, race, and other characteristics of the unemployed. It also breaks down the unemployed by length of time they've been without a job. Those who have been unemployed for so long they've become discouraged and dropped out of the labor force are no longer counted as unemployed discouraged. Many experts say the real unemployment rate should include them. The length of time also tells you whether people are unemployed due to a mismatch between their skills and employer needs -- a situation known as structural unemployment.
In addition to national data, the BLS Unemployment Report also breaks down unemployment by state and local regions, as well as comparing the U.S. to ten other countries. The BLS also reports the monthly Mass Layoff Statistics. This summarizes major business layoffs, using data from each state's unemployment insurance database.
Monthly employment and unemployment figures since 1948 are available at the BLS website. The BLS also has archive information, available upon request, for annual employment figures back to 1929.
Another important report is the Consumer Price Index, which measures inflation. The BLS surveys 23,000 businesses to get price data on 83,000 items. This data is rolled-up into important categories, like food, oil and apparel.
Inflation is important to measure, since it can affect consumer behavior. If shoppers know that prices will continue to edge up, they will be more likely to buy now when prices are relatively cheaper. This stimulates demand, which spurs economic growth. However, too much inflation rob families of their ability to buy greater quantities. This can hurt demand, as factories don't need to produce as much. If inflation gets out of control, it can turn into hyperinflation, which is when prices rise more than 10%.
If prices fall too rapidly, this can cause deflation, which can be a greater threat than inflation. Why? If consumers know prices will fall in the future, they will delay their purchases. This will stifle demand, leading to lower factory production and unemployment. Companies will continue to lower prices, hoping to get what business there is. To find out how the Federal Reserve fights inflation, hyperinflation and deflation, see How the Fed Manages Inflation.
The BLS also produces these other reports from the CPI data:
- The Producer Price Index, which highlight costs to manufacturers.
- The Productivity Report, which reports on how the productivity levels of workers.
- Import and Export Prices, which reports on the prices of imports and exports.
- Employment Cost Trends, which reports on employee compensation.
- International Consumer Price Indexes, which measures inflation in some foreign countries.
How the BLS Affects the U.S. Economy
The Bureau of Labor Statistics reports can determine whether the Dow will have an up or a down day. Wall Street holds its breath until the Employment Report is released at 8 a.m. EST on the first Friday of each month. The Consumer Price Index is used by the Federal Reserve to determine its monetary policy.
How It Affects You
Each Bureau of Labor Statistics press release directly impacts your portfolio that day. The Employment Report can tell you which industries are hiring. Therefore, it is in your best interest to be aware of the economic trends reported by the Bureau of Labor Statistics. The best way is to sign up for their free email newsletter. There are 25 reports available, but the most critical to review regularly are these three:
Current BLS Reports
For each monthly employment report since 2007, see Current Employment Statistics. To find out the unemployment status for each month since April 2007, go to Current Unemployment Statistics. To see what the CPI was for each month, read Current Inflation Rate.