Not really, but a pretty bad look for the BLS. Many have been skeptical about the figures coming out and they were right.
Data published Wednesday by the Bureau of Labor Statistics suggest payrolls might have grown about 60,000 less per month on average last year than the roughly 250,000 run-rate derived from the agency’s monthly employment report. The new figures, from the Quarterly Census of Employment and Wages, cover more than 95% of US jobs. and are eventually used in annual revisions to the monthly data.
The QCEW release, as it’s known, adds to uncertainty surrounding the state of the labor market as the US central bank deliberates over when to begin cutting interest rates. While some indicators — such as monthly payrolls and weekly unemployment insurance claims — suggest the market remains robust, others — such as rising unemployment and a decline in job openings — point to cracks developing.
“There’s a pretty good chance that the establishment survey has been really overstating the condition of the labor market,” Barry Knapp, founder of Ironsides Macroeconomics, said of the monthly payroll numbers. “The job market is weaker than the Fed thinks.”
A chunk of the potential overestimation of payrolls stems from adjustments the agency makes to the monthly employment report to account for the net amount of businesses opening and going under, Wong and Knapp say. Because the BLS only surveys existing establishments, it uses a so-called birth-death model to estimate those flows.
“The labor market saw a turning point sometime in the second half of 2023,” Wong said. “Business closures surged, while new business formations slowed sharply.”
Data published Wednesday by the Bureau of Labor Statistics suggest payrolls might have grown about 60,000 less per month on average last year than the roughly 250,000 run-rate derived from the agency’s monthly employment report. The new figures, from the Quarterly Census of Employment and Wages, cover more than 95% of US jobs. and are eventually used in annual revisions to the monthly data.
The QCEW release, as it’s known, adds to uncertainty surrounding the state of the labor market as the US central bank deliberates over when to begin cutting interest rates. While some indicators — such as monthly payrolls and weekly unemployment insurance claims — suggest the market remains robust, others — such as rising unemployment and a decline in job openings — point to cracks developing.
“There’s a pretty good chance that the establishment survey has been really overstating the condition of the labor market,” Barry Knapp, founder of Ironsides Macroeconomics, said of the monthly payroll numbers. “The job market is weaker than the Fed thinks.”
A chunk of the potential overestimation of payrolls stems from adjustments the agency makes to the monthly employment report to account for the net amount of businesses opening and going under, Wong and Knapp say. Because the BLS only surveys existing establishments, it uses a so-called birth-death model to estimate those flows.
“The labor market saw a turning point sometime in the second half of 2023,” Wong said. “Business closures surged, while new business formations slowed sharply.”
