The most important data in Friday’s employment report wasn’t the strong top line payroll estimate — 171,000 new jobs. That’s a strong indicator, but highly uncertain. Indeed, the uncertainty in the initial figures is about 100,000 jobs in each direction.
Pay closer attention to the revisions to the August and September numbers — most notably August. They’re much closer to the mark.
For instance: President Obama faced some brutal headlines when the August jobs report estimated that the economy created only 96,000 jobs that month. In September, that number was revised up to 142,000. Today, it was re-revised up to 192,000. Turns out the labor market in the summer was quite strong, even though BLS’ initial survey suggested otherwise. That didn’t do Obama any favors with headline writers, who like most people can’t see weeks into the future. But those headlines seemed to have no impact on the race at the time, and that’s probably because the real labor market that real people work and seek work in felt much sturdier than the news stories suggested.
Likewise, BLS revised September payroll figures up from 114,000 to 148,000.
The Labor Department’s former top economist explained the significance: “Why are so many revisions upward right now? Because revisions are more likely to be up in a recovery.”
By contrast, in its February 2009 report, at the height of the recession, BLS revised its previous payroll figures way down. “The change in total nonfarm employment for December was revised from -577,000 to -681,000 and the change for January was revised from -598,000 to -655,000.”
Obviously the economy’s much healthier now. And when you look at recent months’ revised data, things look very positive.
