It’s almost jobs day in America, and it’s going to be a big one.
Bank of America Merrill Lynch strategist Athanasios Vamvakidis called the upcoming June jobs report “the most important NFP of the year” in a note circulated to clients. Vamvakidis’ rationale is that, after the dismal May jobs report in which only 38,000 jobs were added, far below expectations of 160,000, the June report will shed light on whether that was an aberration or the start of an ominous trend.
However, that May number might not turn out to have been as terrible as we all thought. The jobs report, in addition to the headline-making new estimates for job creation in the most recent month, includes revisions to the prior two months’ non-farm payroll numbers. The non-farm payroll figures are based on a survey of business establishments, and as the Bureau of Labour Statistics gathers more information, they can refine the original estimates to get a better picture of what was actually going on in the labour market in previous months.
Those revisions can be quite substantial, and can move in either direction, making what initially looked like a good jobs reports much worse, or terrible reports much better. To illustrate this, here are the revisions made in the month after each initial estimate going back to the start of last year. The revisions can frequently be pretty big:
In addition to the regular uncertainty in the jobs numbers as illustrated in the chart, there’s another reason to expect good news tomorrow: The May report had a weird anomaly, as about 35,000 Verizon workers were on strike during the week that the BLS was running the employment survey. Putting those jobs back in alone should make things look somewhat better.
Of course, it’s also possible that things could swing the other way, and we could see a revision down in the May numbers, making a bad jobs report into an utterly terrible one.
Either way, one of the big numbers we’ll be looking for in the new jobs report will be all about the last report.
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