Yesterday morning, I had difficulty finding the BLS job revisions. So did everyone else. Eventually the BLS posted -818,000 but my unadjusted calc of -915,000 is accurate too.
Banks Obtained Crucial Jobs Data While Report Was Delayed
This is what happened yesterday: Bloomberg explains Banks Obtained Crucial Jobs Data While Report Was Delayed
At least three banks managed to obtain key payroll numbers Wednesday while the rest of Wall Street was kept waiting for a half-hour by a government delay that whipsawed markets and sowed confusion on trading desks.
After the Bureau of Labor Statistics failed to post its revisions to the monthly payroll figures at 10 a.m. New York time, Mizuho Financial Group Inc. and BNP Paribas SA both called the department and got the number directly. So did Nomura Holdings Inc.’s economic research team, according to a person familiar with the situation.
Anger quickly mounted as word spread across Wall Street that the BLS had begun giving out the numbers over the phone. A scramble ensued, with other firms and media outlets, including Bloomberg News, trying to obtain the figures, too.
When the data was finally released around 10:30 am, it showed payrolls will likely be revised down by 818,000 for the 12 months through March, the steepest markdown to the job numbers since 2009. Stocks initially jumped and bonds gained because the report lent support to speculation that the Federal Reserve will start cutting interest rates next month.
-818,000 or -915,000?
I could not find the data and did not understand where the heck everyone was getting -818,000 from.
So I did my own calculations from the data that I could find and arrived at -915,000.
Both numbers are correct. My post of -915,000 is the unadjusted number and -818,000 is the adjusted number.
You need to go to two different reports to find both sets of numbers and one was not there.
Wall Street Outraged
Zerohedge has a more colorful version of this story: Wall Street Outraged Over Latest Epic F*ck Up By Biden’s Labor Department
I had no idea where -818,000 came from so I did my own calculations.
Here is my post from yesterday: Was the Real Jobs Revision Negative 818,000 or Negative 915,000?
I listed 5 possibilities of what happened.
Five Possibilities
- The BLS created a seasonally-adjusted number and gave it to Bloomberg without publishing it.
- The BLS published 818,000 but where?
- Bloomberg made an estimate of the seasonally-adjusted number and reported it, without specifying it is their adjustment. Everyone copied the number without question.
- Bloomberg or whoever was first in reporting 818,000 made a bad calculation using a mix of seasonally-adjusted and unadjusted numbers.
- Something else, but what?
And the winner is ….. #1
Several banks, Zerohedge, and others got the number after calling in.
I gave up and did my own calculations, accurately but unadjusted, as I stated.
Eventually #2 came into play after I gave up looking for it.
OK, here’s the report.
CES Preliminary Benchmark Announcement
Please consider the CES Preliminary Benchmark Announcement
In accordance with usual practice [but not in the usual way], the Bureau of Labor Statistics (BLS) is announcing the preliminary estimate of the upcoming annual benchmark revision to the establishment survey employment series. The final benchmark revision will be issued in February 2025 with the publication of the January 2025 Employment Situation news release.
Each year, the Current Employment Statistics (CES) survey employment estimates are benchmarked to comprehensive counts of employment for the month of March. These counts are derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. For National CES employment series, the annual benchmark revisions over the last 10 years have averaged plus or minus one-tenth of one percent of total nonfarm employment. The preliminary estimate of the benchmark revision indicates an adjustment to March 2024 total nonfarm employment of -818,000 (-0.5 percent).
Preliminary benchmark revisions are calculated only for the month of March 2024 for the major industry sectors. The existing employment series are not updated with the release of the preliminary benchmark estimate. The data for all CES series will be updated when the final benchmark revision is issued.
As is typically the case, many of the individual industry series show larger percentage revisions than the total nonfarm series, primarily because statistical sampling error is greater at more detailed levels than at an aggregated level.
Nothing Was Normal
A reader told me yesterday morning that a deviation of 0.5 percent is normal.
I replied that it isn’t. In fact, the deviation is 500 percent of normal. And if you look at private data, the deviation was 600 percent of normal.
Nothing about yesterday had anything to do with normal anywhere, in any way.
Regarding the Lead Chart
The two positive revisions are due to increased need for services due to millions of immigrants.
Government also tacked on 1,000 jobs but that revision is tiny. That’s one sector highly likely to be revised up.
Revisions When? How?
- The existing employment series [monthly reports] are not updated with the release of the preliminary benchmark estimate.
- The final benchmark revision will be issued in February 2025 with the publication of the January 2025 Employment Situation news release.
A Word About Bullsheet
In February of 2025, the BLS, in accordance with usual practice, will make revisions.
These revisions will not be monthly, or even quarterly.
It will be one big bang poof here you go update, with wild swings in the data. This will make all historical charts useless.
Thus, not only are the monthly job reports nothing but bullsheet, they will remain bullsheet even after the BLS posts revisions.
Don’t worry, there is nothing unusual about this. It happens every year.
But February of 2025 will be special because we will get 500 percent of the usual bullsheet, long after hardly anyone cares about how big the bullsheet was, and in a way that makes it difficult if not impossible to properly analyze for the few who do care.
Meanwhile, reporting of standard monthly bullsheet will proceed as normal, only to be revised later.
Any questions?
Improving the McKelvey Recession Indicator
I believe a recession has started.
2024 Q2 and 2024 Q3 numbers will be increasingly poor. There have been negative revisions in nearly all economic reports.
On August 20, I commented Improving the McKelvey Recession Indicator, No False Negative or Positive Signals
Adding the job vacancy rate to the McKelvey (Claudia Sahm) recession signal eliminates false negatives and false positives, and provides a much faster signal than Sahm.
Since 1953, every time the economy was in the current state, the economy was in recession.
That does not make the odds 100 percent because everything is up to the NBER, the official arbiter of recessions.
The NBER is very late in deciding. In one recession, the NBER posted the dates after the recession ended. So don’t expect timely confirmation.
My recession post is on the complicated side, but please check it out.