Despite the unexpectedly large increase of 163,000 jobs in July according to the establishment survey, Gallup and BLS household survey data show that the U.S. unemployment situation continues to deteriorate. In this regard, it seems like Gallup's finding of an increasing unadjusted unemployment rate and a shrinking workforce have a lot of face-validity given the slowing U.S. economy.
On an unadjusted basis, the BLS reports the number of employed Americans decreased by 76,000, while the unemployed increased by 216,000.
As a result, the government's unadjusted unemployment rate increased to 8.6% in July from 8.4% in June -- the same size increase shown in Gallup's July unemployment results.
After the government applied its seasonal adjustments, the decrease in the number of employed Americans is 195,000, while the increase in the unemployed is 45,000. As a result, the BLS reported an increase in the seasonally adjusted unemployment rate to 8.3%. It is noteworthy that the government's seasonal adjustments seem to add to, rather than diminish, confusion regarding the jobs picture.
At the same time, the BLS reported no change in the unadjusted participation rate at 64.3% and a drop in the seasonally adjusted participation rate to 63.7% in July from 63.8% in June. Gallup's survey finding is that the workforce declined much more sharply on an unadjusted basis, and therefore also on an adjusted basis. Regardless of whether this difference in participation rates between Gallup and the BLS is a lagged effect associated with survey differences, any decline in the participation rate adds further support to the idea that the U.S. jobs situation is getting worse, not better.
