The Bureau of Labor Statistics is set to release the preliminary estimate of the upcoming annual benchmark revision to payroll data on Wednesday.
The benchmark revision aligns jobs data with the precise Quarterly Census of Employment and Wages (QCEW), derived from state unemployment insurance records and covering nearly all U.S. jobs.
An expert's prediction of a net loss of a half-million jobs in the January-February 2023 period has stoked speculation and concerns about the state of the U.S. job market.
JPMorgan Anticipates 500K Fewer Payrolls
Daniel Silver, analyst at JPMorgan Chase & Co., has cast a spotlight on the magnitude of the potential revision, as reported by Bloomberg on Tuesday.
Silver's projection suggests the BLS preliminary benchmark revision could lead to a staggering 500,000 fewer jobs in the three-month period, significantly altering the market perception of the labor market's recent trajectory.
This forecast raises essential questions about the accuracy of previous payrolls data and the factors that may have contributed to the potential discrepancy.
A job reduction of this magnitude would amount to approximately 40,000 fewer jobs added per month over a year. However, even with such a substantial revision, the labor market's underlying strength remains evident, with average job growth projected to hover around 300,000 payrolls each month.
This year's employment reports have consistently surprised analysts, with payrolls gains exceeding expectations. The Federal Reserve's interest rate decisions have been influenced by these figures as policymakers grapple with containing inflation amid robust job growth.
Economic Experts Remain Cautiously Optimistic
While the BLS preliminary estimates could reveal weaker payrolls growth than initially reported, experts such as Oscar Munoz, chief US macro strategist at TD Securities, suggest the revisions may not fundamentally alter economists' views on the overall health of the labor market.
This sentiment underscores the resilience of the U.S. economy, even in the face of potentially significant labor market adjustments.
In July 2023, the U.S. economy added 187,000 jobs, which was below market forecasts of 200,000 and came on the heels of a downwardly revised 185,000 in June. This number is also lower than the average monthly increase seen over the previous year, which stood at 312,000.