Brace yourself for upcoming adjustments in job market figures
The Bureau of Labor Statistics (BLS) is set to release a significant revision to its jobs data on Tuesday, with economists predicting a potential downward adjustment for the 12-month period ending in March 2024. This annual revision, known as benchmarking, is a standard procedure that has been applied to BLS jobs data for 90 years.
The QCEW (Quarterly Census of Employment and Wages) data, derived from quarterly tax reports submitted by businesses to their states, provides a more comprehensive read on the number of businesses, employees, and wages at the state, regional, and county level. This data will also be released on Tuesday, along with the QCEW data for the first quarter of the current year.
Last year, the preliminary estimate suggested there were likely 818,000 fewer jobs added in the 12-month period through March 2024. However, Ron Hetrick, a former BLS employee and analyst, believes this year's revision might be more accurate. He had previously expressed concerns about downward revisions, feeling they weren't a true reflection of how many people were working.
The likely causes for the reduction in labor market evaluations between April 2024 and March 2025 include a slight decline in job openings, ongoing economic pressure, longer vacancy durations, and some positive signals like the increase of the IAB labor market barometer and expectations for employment stabilization despite persistent industrial sector challenges.
Economists suggest that a hefty chunk of the expected downward revision could be due to the BLS modeling of business creation (birth-death model) overestimating the jobs added at new businesses. Additionally, the slowing of immigration that started in the middle of last year and accelerated this year, and the third primary factor tied to asylum-seekers and undocumented workers, as the QCEW data is drawn from tax filings for unemployment insurance, could also contribute to the revision.
It's important to note that the preliminary benchmark revision won't change the existing monthly employment data for now. However, a large revision to the jobs data could carry deeper implications, potentially adding to concerns about the reliability of the data.
This is not the first time large swings in job revisions have occurred in significant economic transitions. Such instances were seen during the Great Recession and the pandemic. Given these circumstances, the revision might better truly reflect the labor market.
President Donald Trump had previously fired the Bureau of Labor Statistics commissioner over baseless allegations that the data was "rigged." The BLS conducts an annual revision to the data from its monthly survey of businesses' payrolls, known as benchmarking, to ensure the data remains accurate and reliable.
Stay tuned for the BLS's preliminary data for its annual effort of gaining a near-complete employment count on Tuesday.
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