Bureau of Labor Statistics: What It Does and Its Impact

The Bureau of Labor Statistics collects and analyzes employment reports. Photo: Photo: Thomas Barwick/Getty Images

The Bureau of Labor Statistics (BLS) is the premier research arm of the Department of Labor. It collects, analyzes, and reports on a range of employment, unemployment, and price statistics. These reports are critical aids to taking the pulse of the U.S. economy.

Learn more about what the Bureau of Labor Statistics does and why this information matters to everyday workers and investors.

Employment Report

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, manufacturing jobs, is one of the most important leading economic indicators. A reduction in manufacturing jobs is often the first sign of an impending recession. When demand starts to soften in a recession, manufacturers will most likely feel it first. To meet their profit margins, which are often razor-thin, they start reducing shifts.

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 chart below illustrates the BLS Jobs Report data, showing how many jobs were gained or lost, month to month, from 2015鈥搕o 2021.

The BLS provides a variety of analyses and reports from the data collected for the Employment Report, including:

State, county, and local employment
Wages
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

Unemployment Report

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 characteristics of the unemployed, including:

Age
Gender
Race

It also breaks down unemployment by the length of time searching for work. The length of time can indicate whether people are unemployed due to a mismatch between their skills and employer needs, a situation known as structural unemployment.

Note

Those who have been unemployed for so long that they've become discouraged and dropped out of the labor force are no longer counted as unemployed. Many experts say the real unemployment rate should include them.

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.

The monthly employment and unemployment figures since 1948 are available on the BLS website. The BLS also has archive information, available upon request, for annual employment figures dating back to 1929.

Inflation Report

Another important report from the Bureau of Labor Statistics 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, such as 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 can reduce consumers' 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. 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.

The BLS also produces these other reports from the CPI data:

The Producer Price Index highlights costs to manufacturers.

The Productivity Report reports on how the productivity levels of workers.

Import and Export Prices reports on the prices of imports and exports.

Employment Cost Trends reports on employee compensation.

International Consumer Price Indexes 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 Federal Reserve uses the Consumer Price Index to determine its monetary policy. Based on indicators in the Consumer Price Index, the Federal Reserve may make adjustments to interest rates to manage inflation.

How the BLS 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 the: