-Caveat Lector- Reuters
Odd Farm-Sector Surge Distorts Jobs Data Tuesday November 5, 2:48 pm ET By Wayne Cole NEW YORK (Reuters) - An inexplicable surge in farm jobs has played a major part in keeping the U.S. unemployment rate down in recent months, despite persistent weakness in other labor market indicators. Without the jump in farm-based employment since June, the jobless rate would have climbed steadily to reach 6.0 percent in October. Instead the jobless rate fell in September and then inched back to 5.7 percent last month. If it had topped 6.0 percent, consumer confidence might have suffered far more, bond yields tumbled and the case for an interest rate cut -- now expected on Wednesday from the Federal Reserve -- might be that much clearer. The strength baffles analysts and statisticians alike and could reinforce financial market skepticism of the unemployment figures as a reliable indicator of the economy. "The massive surge in farm jobs has been an important factor depressing the published unemployment rate at a time of little or no growth in nonfarm payroll employment," said Rory Robertson, an interest rate strategist who covers the U.S. economy for Australian house Macquarie Equities. "Of course, the rapid growth in farm jobs -- the fastest in more than 50 years of data -- seems implausible, to say the least," he added. The Department of Labor uses a monthly survey of 60,000 households to compile the unemployment series, in contrast with the monthly payrolls figures, which come from an established survey of around 350,000 businesses. In recent months the unemployment rate has diverged from the trend in payrolls, dipping from 5.9 percent in June to 5.6 percent in September before edging up to 5.7 percent last month. At the same time, payrolls growth has been muted at best, running at levels which typically would be associated with a rise in the jobless rate. The dichotomy has stirred a major debate among economists -- some of whom claim that the unemployment survey is flawed, while others argue that it is actually more representative of the economy as a whole and the payrolls survey is at fault for overlooking hundreds of thousands of small firms. The odd behavior of the farm sector would seem to support critics of the unemployment survey and suggests that the true jobless rate is higher than the figures suggest. UP ON THE FARM The stellar performance of the usually laggard farm sector certainly sits at odds with the sluggish state of the broad economy. Since June some 415,000 jobs have been created in agriculture, excluding forestry and fishing -- a rise of 13 percent and easily the fastest growth in decades. While the farm sector makes up only 2.6 percent of total employment, its surge has accounted for almost fully half of the 861,000 new civilian jobs generated since June. "It's certainly an unusual occurrence, but we haven't looked into it as such," said a spokesperson at the Department of Labor. She noted that much of the jump came in October and that the figures were volatile from month to month, suggesting farm employment could easily fall sharply in November. Farm jobs climbed 227,000, seasonally adjusted, in October to 3.525 million, having risen 110,000 the month before. In June total farm sector employment was reported at 3.110 million. The strength of farm jobs also came as a surprise to the Department of Agriculture, where an economist said there had been no developments in the industry to account for such an astounding pickup. "Is anything real going on here?" asked Robertson at Macquarie. 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