The reporter said – Businesses hired last month but the unemployment rate went up? I am confused , how can that be?

Yes there is a lot of confusion when it comes to the nation’s unemployment rate. Statements like above are routinely made on tv and also you read about it in publications. Hopefully the explanation below should clear up the confusion.

First of all the unemployment rate is released on the 1st Friday of every month. That is when the Bureau of Labor Statistics, BLS for short releases the unemployment rate to the
Public. Actually and if you want to get really technical about it, the BLS summons a bunch of reporters to a secret location to release the employment situation report to them
Around 8am.

The reporters in turn release it to the public around 8:30am. This is due to the sensitive nature of this statistic we call unemployment rate. Sorry to go off the tangent here,
Anyway back to trying to clear up the confusion as to why the unemployment rate went up even though businesses added jobs.

The BLS does two surveys as part of the employment situation report. One is called the payroll survey where they find out from businesses if they have shed jobs or hired people. The other survey is called the civilian survey and the BLS surveys ordinary people like you and me to find out if we are employed or out of work etc. The unemployment rate is calculated using the civilian survey. Therefore it is possible that the businesses really added jobs but the unemployment rate really went up at the same time as they are part of two different samples.

Hope this clears up the confusion as it did for me as this is also a very closely watched number at the political, business and the public level.