Employment Indicators
Primary sources: Bureau of Labor Statistics (Current Employment Statistics and Current Population Survey) and ADP Research Institute. The monthly Employment Situation report (first Friday of each month at 8:30 AM ET) is among the most market-moving economic releases.
Overview
The Federal Reserve has a dual mandate: maximum employment and stable prices. Employment indicators are therefore central to monetary policy decisions. The FOMC monitors a broad set of labor market data beyond the headline unemployment rate, including measures of labor market tightness (job openings relative to unemployed), wage growth, labor force participation, and the breadth of employment gains across industries.
Two distinct BLS surveys produce the headline employment data each month. The establishment survey (CES) contacts businesses and produces the nonfarm payrolls number. The household survey (CPS)contacts individuals and produces the unemployment rate. These surveys can and often do tell different stories about the same month's labor market conditions.
Key Employment Indicators
Nonfarm Payrolls
Total number of paid U.S. workers excluding farm employees, private household employees, and nonprofit organization employees. Derived from the Current Employment Statistics (CES) survey of approximately 119,000 businesses and government agencies covering about 629,000 worksites.
Unemployment Rate (U-3)
Percentage of the labor force that is jobless, actively seeking work, and available to take a job. The official unemployment rate. Based on the Current Population Survey (CPS) of approximately 60,000 households.
U-6 Unemployment Rate
Broadest measure of labor underutilization. Includes U-3 plus marginally attached workers (those who want work but have stopped looking) and persons employed part-time for economic reasons (involuntary part-time).
Labor Force Participation Rate
Percentage of the civilian noninstitutional population age 16+ that is either employed or actively seeking employment. Declined sharply during COVID-19 and has not fully recovered to pre-pandemic levels.
JOLTS: Job Openings
Total number of job openings on the last business day of the month. Part of the Job Openings and Labor Turnover Survey. The ratio of job openings to unemployed persons is a key measure of labor market tightness.
JOLTS: Quits Rate
Quits as a percentage of total employment. Voluntary separations indicate worker confidence in finding new employment. Elevated quits rates suggest a strong labor market.
Average Hourly Earnings
Average hourly earnings for all employees on private nonfarm payrolls. Reported as both level and year-over-year percentage change. A key wage growth metric watched by the Fed for inflationary pressure.
Employment Cost Index (ECI)
Measures the change in the cost of labor, including wages/salaries and employer costs for benefits. Considered a more comprehensive and less composition-biased measure of labor costs than average hourly earnings.
ADP National Employment Report
Private-sector employment estimate based on ADP payroll processing data covering approximately 25 million U.S. employees. Published 2 days before the BLS report. Uses different methodology and sample; correlation with BLS varies.
ADP vs. BLS Methodology
The ADP National Employment Report and the BLS Employment Situation report use fundamentally different methodologies:
| Dimension | BLS (CES) | ADP |
|---|---|---|
| Data source | Survey of ~119,000 businesses/agencies | ADP payroll processing records (~25M employees) |
| Coverage | All nonfarm (private + government) | Private sector only |
| Revisions | Two subsequent monthly revisions + annual benchmark | Monthly revisions; methodology overhauled in 2023 |
| Release timing | First Friday of month | Wednesday before BLS Friday |
The two reports frequently diverge in a given month. The BLS report is considered the official benchmark. ADP redesigned its methodology in 2023 to rely more on matched payroll data and less on modeling.