Wednesday, May 2, 2012

JOBS | March Metros Index–93.8 and 73.1, Slower Growth

Metro Jobs in March showed a diffusion index of 93.8 for unemployment and 73.1 for payroll jobs. The BLS reported the numbers today:
Unemployment rates were lower in March than a year earlier in 342 of the 372 metropolitan areas, higher in 16 areas, and unchanged in 14 areas.... [Also,] 267 metropolitan areas reported over-the-year increases in nonfarm payroll employment, 96 reported decreases, and 9 had no change. The national unemployment rate in March was 8.4 percent, not seasonally adjusted, down from 9.2 percent a year earlier.
The trouble with this method of reporting is that the monthly data come in clusters of three. A diffusion index provides a single number showing how metros have done. Using the same weights as the Conference Board, the numbers that get better get a 1 and the numbers that get worse get a zero; the number of unchanged metros get a 0.5. That makes for an unemployment diffusion index of (342+7)/372 = 93.8 percent of metros showed a favorable direction.

But the corresponding index for nonfarm payroll jobs would be (267+4.5)/372 = 73.0 percent. In other words, in 73.0 percent of metros, payroll jobs showed a favorable direction (they grew). This doesn't sound so encouraging. Job growth is too slow.  

It makes a difference how the numbers are presented. If a single number fairly reports multiple numbers without much loss of information from the aggregation, the public is better off. Better public understanding of the data makes for better policies.