Deciphering June's Job Data

After unexpected employment declines in April and May, attention is focused on the June report due out on July 7. Since the Federal Reserve open market committee meets July 5-6, many observers think the Fed could postpone a possible easing until July 7, when everyone--including Fed policymakers--has had time to digest the numbers.

The problem, says economist Maury N. Harris of PaineWebber Inc., is that the June report will be statistically flawed. This year, he notes, the June payroll survey was conducted five weeks after the May survey. And in recent decades, such large intervals between employment surveys in May and June (when many students enter the labor force) have tended to magnify any changes in the job totals.

The upshot is that June's job count will be biased upwards--complicating the Fed's task (and the markets' perception)--even though Fed economists are presumably familiar with the problem.

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