Forex glossary
Unemployment Rate
The unemployment rate is the share of people meeting unemployment criteria in the labour force, not the entire population. US U-3 comes from the CPS household survey; its criteria include no job, availability and active search, with specified exceptions. It differs from unemployment-insurance claims and NFP employment.
Illustrative example
How does it work in practice?
In a hypothetical survey population, 950 people are employed, 50 meet unemployment criteria and 200 are outside the labour force. Unemployment is 50 ÷ 1,000 = 5%, rather than 50 ÷ 1,200.
A case to work through
Fewer unemployed, no more employment
A fictional sample has 900 employed and 100 unemployed; 20 unemployed leave the labour force under its criteria.
- Initially, the rate is 100 ÷ 1,000 = 10%.
- Later it is 80 ÷ 980 ≈ 8.16%, with employment still 900.
What follows? Check employment and labour-force size alongside the rate.
Example boundary: This assumes no other changes and correct person classification.
The unemployment denominator
Text description of the diagram
- Employment: Hypothetically 900 people, unchanged.
- Unemployed: 100 → 80; 20 people leave the labour force.
- Rate: 100/1,000 = 10%; later 80/980 ≈ 8.16%.
A useful distinction
Unemployment Rate / Non-Farm Payrolls (NFP)
NFP counts payroll jobs; unemployment counts people in a household survey.
Check your understanding
Calculate unemployment after a hypothetical labour-force departure.
Show the answer and explanation
No, also check employment and participation
The percentage alone does not explain why.
Different US labour measures
Step 6 / 8 · 0 / 8 reviewed
View the full sequence →Progress is saved only in this browser.
Read the fuller explanation
Related terms
Sources and documentation
- Concepts and Definitions (CPS) – BLS
Defines labour force, unemployment-rate formula and people outside the labour force.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.