The Employment report
The employment report is comprised of the household and establishment surveys. The surveys produce non-farm payrolls, average workweek, and average hourly figures. Together, these two surveys make up the employment report, the most timely and broadest indicator of economic activity released each month.
The household survey is primarily used to indicate the unemployment rate. The rate is calculated by dividing the number of unemployed by the number of people in the workforce. The unemployment figure is quite volatile due, in part, to the small sample size of the survey—roughly 60,000 households. It is useful to crosscheck the household survey results with the labor and employment figures to determine whether changes are truly representative.
The establishment survey measures productivity of the workforce. The most important component of the survey—and indeed, in the entire employment report—is non-farm payrolls. Non-farm payrolls measure the number of non-agricultural workers in the national workforce. The monthly changes in payrolls can be extremely volatile from one month to the next. However, aside from large swings and the possibility of rather substantial revisions to previous data, non-farm payrolls offers the most comprehensive and extensive snapshot of the economy.
There are two more important indicators in the employment report that bear mentioning: the average hourly earnings and average workweek figures. The average hourly earnings figure not only offers an indication of personal income growth, and consequently a possible indicator into future spending patterns, it also offers evidence of inflationary pressures. The number of hours worked by the non-agricultural workforce is an important determinant in both industrial production and personal income.

Average hourly earnings
The last indicator from the employment establishment survey, which is worthy of close inspection, is average hourly earnings, which is important for two reasons. Alongside total man-hours, the average earnings figure gives us a good indication of personal income growth during the month. Second, the earnings figures are closely watched during periods of strong economic growth for evidence of increasing wage pressures. Such has certainly been the case over the past year, as the market's reaction to the employment data has often turned on the change in hourly earnings and its implications for the inflation outlook.

Average workweek
The workweek, also referred to as hours worked, is an often-underrated indicator in the employment establishment survey. The average number of hours worked by employees on non-farm payrolls is an important determinant of both industrial production and personal income in any given month. The workweek typically sees changes of a tenth or two each month, but can see much larger swings, such as the four tenth decline reported for October. To understand the importance of these changes in the workweek, note that a one tenth decline in the average workweek of 120 mln workers (roughly the current level of employment) results in 12 mln fewer hours worked. To create a similar decline in man-hours through a change in employment, payrolls would have to fall 340K. For the purposes of production and income calculations, a one tenth of an hour change in the workweek is equivalent to a 340K change in employment. Needless to say, the workweek data are therefore critical in judging the overall strength or weakness of the employment report.

Initial jobless claims
The Initial jobless claims report measures the number of filings for state jobless benefits. This report provides a timely, but often misleading, indicator of the direction of the economy. Due to the week-to-week volatility of jobless claims, many analysts track a four week average to get a better picture of the underlying trend. It typically takes a sustained move of at least 30,000 claims to signal a meaningful change in job growth.

Non-farm payrolls
Without question, the single most important piece of data contained in the employment report generally and the establishment survey specifically is non-farm payrolls. As the name implies, non-farm payrolls measure the number of people on the payrolls of all non-agricultural businesses. The monthly changes in payrolls can be quite volatile, occasionally varying by better than 200K from one month to the next. Even with this volatility and the possibility of large revisions to past data, the payrolls figures offer the most timely and comprehensive snapshot of the economy.

Unemployment rate
As we noted earlier, the household survey is not nearly as reliable as the establishment survey due to the small size of the survey sample. This survey nevertheless receives attention, primarily because it is responsible for the one figure, which is guaranteed to lead the nightly news - the unemployment rate. The unemployment rate demands little explanation, though it is worth noting that the rate can occasionally sees significant monthly changes, which are due to flukes in the data. The rate is simply the result of dividing the number of people unemployed (labor force less employed) by the number of people in the labor force. The problem is that the employment and labor force measures in the household survey are far more volatile than even non-farm payrolls. The reason, of course, is the small survey sample size. It is therefore useful to look at the labor force and employment figures themselves to determine if changes in the unemployment rate are due to aberrant swings in one or both of these series. Beyond the basics of tallying up the labor force and employment, the household survey breaks down these totals in every way imaginable - by gender, race, age, type of job, duration of unemployment, and on and on. These breakdowns seldom are of interest to the financial markets. Perhaps the only two exceptions are the discouraged worker and part-time worker measures.

Unit labor cost
Non-farm productivity and costs measures worker productivity in relation to the cost of producing a unit of output. During times of inflationary concern, the unit labor cost index in this report can move the market. If productivity is falling, unit labor costs may be rising faster than hourly earnings, which could lead to unemployment.