Impact of the annual non-farms labor revisions from the Bureau of Labor Statistics
What does this mean for the current state of the US economy?
The latest Benchmark Revision has been released by the Bureau of Labor Statistics (BLS), and I spent the morning crunching together a worksheet to track and study the macro-economic data that comes in over time. Here’s the visualization of the data:
Methodology for charting data
The BLS data releases are extremely complex and rife with multiple revisions, estimates, and assumptions. There is inconsistency in the way they report monthly estimate figures vs. benchmark adjustment releases.
For these charts above, I chose the following methodology:
- For all these charts, I’m using NON-SEASONALLY ADJUSTED figures and estimates. The seasonality adjustments of the BLS change yearly and with different administrations, so I want to keep track of the least manipulated data as possible.
- These are Month over Month (MoM) values, not the strict labor levels. Thus these charts are tracking the derivative of the number of jobs in the market >> job changes
- The bureau lumps the benchmark preliminary revisions (announced in August) into one month — March, before releasing the final job growth numbers of each individual month the following February. (This is a bit confusing. Compound this with the fact that they don’t seem to release final non-seasonally adjusted MoM changes in February, only the total change for the year. Because of this I am distributing that final announced number across the months equally).
Because I’m making that distribution of total change across the months of the year, there may be nominal discrepancies in the monthly chart visualization. In aggregate though, this shouldn’t impact our analysis of the trends we see.
Thoughts on the data
I think these visualizations can help you start to see the effects on the change figures of the labor market.
What’s important to remember is that these charts are the derivative of job levels — that being job changes, so we are still see growth, which is a good thing. That’s where a lot of media headlines, politicians and talking heads will try to manipulate the talking points. So don’t fall into that trap. If you go one derivative further, to the rate of change (aka how fast change is happening), you’d find that that has taken the brundt of the punishment this year.
But looking at the YTD so far, we see that the initial estimates for Q2 labor in 2024 is really saving us from being flat or even negative in the market. The validity of the data is going to be highly scrutinized here as we continue moving forward. That’s why there is so much angst and chatter in the markets because we can see a labor recession starting to form if these warning signs aren’t heeded.
Now, I personally don’t believe we are heading into a recession just yet. I have somewhat faith in the Federal Reserve, and their ability to engineer their way out of a sticky situation. But now that I have this worksheet created, it’ll be easy to monitor these changes further each month, quarter and year into the future.
