The US Fed announced its job report today, the results were relatively positive and heighten the expectation of the possible rate raising next month. The US unemployment rate fell to 5.0%. The unemployment rate is the key factor people generally pay attention to. There are many other key elements in the report that could indicate an economy’s performance. The first key element is the actual number of unemployed people. By using the number and the unemployment rate, we could calculate the participation rate of the population. Moreover, when we know the number of employed people, then divide the GDP by this number, we could roughly know about the labour productivity. The second element is the wage. When the wage growth rate is larger than the inflation rate, we can know the economy is expanding in real terms. If the wage decreases, but the unemployment rate also falls, we could believe that despite the economy is not doing well at the moment, firms are still confident about the economy’s future performance. If the wage falls and the unemployment rate increases, it is a sign that the economy is in a deep trouble. The third element is the number of jobs created. By comparing the sum of jobs created each month to the change of the unemployment rate, we can know how many jobs created are permanent and how many are temporary. Temporary jobs have weaker effects on the economy. I think these are the three key elements we need to pay attention to besides the unemployment rate.
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