The Revision to Nonfarm Payrolls

This morning we learned that nonfarm payrolls increased by 111,000 last month. That’s a so-so number, but I’ve learned not to take the Labor Department reports too seriously. Or most anything from any government.
Cynical? Consider this: The Labor Department also gave us their big annual revision to the nonfarm payroll report. It turns out that they had been undercounting employment in the U.S. by, oh, nearly a million. I’ll turn it over to their press release:

The total nonfarm employment level for March 2006 was revised upward
by 752,000 (754,000 on a seasonally adjusted basis). The previously published
level for December 2006 was revised upward by 981,000 (933,000 on a seasonally
adjusted basis).

Oh dear lord. That’s like missing an entire state. Here’s what I said in October about employment on Barry Ritholtz’s Blogger Take.

Darn it! The hand-wringing choir has begun, and I’m already behind. Oh, you know the tune: Corporate America is raking in the moolah while Johnny Cubedweller is getting the shaft. I’m sure you’ve heard this before. Paul Krugman even said that we shouldn’t be happy that the Dow has hit a new high.
Sorry professor, but I am happy. (Note: The Dow is up 800 points since then. – Eddy)
What’s the problem this time? It turns out the Labor Department said that the economy created only 51,000 new jobs last month (Note: Now they say it was really 198,000. – Eddy). Now before you join in on the singing, bear in mind that this number will be revised next month. And again in the month after that. And if that’s not enough, sometime in 2017, the later revision of the earlier revision will be revised all over again. It might even lead someone, maybe a taxpayer, to wonder why we have a Labor Department in the first place.
Did I mention that the Labor Department somehow missed 810,000 new jobs created last year? (Note: That was the initial estimate of the revision, which has since been revised. – Eddy) Perhaps they were counting the Household survey. Or was that the Establishment survey? It gets a little confusing here. You see, not only do our labor surveys get revised umpteen times, but there are a few you can choose from.
This is why I don’t pay any of them too much attention. I’m going to take a wild guess and say that September’s number is going to be revised higher. In fact, all of the revisions will tell us the perfectly obvious: The economy is much stronger than the hand-wringers think.
So when those 810,000 workers are finally retired and living on Jupiter, the Labor Department will get around to its last revision of its last survey, and it will tell us exactly what the Dow said all those years ago.

The Dow is up again today. Here’s a look at NFP Old & New (subject to revision):

Posted by Eddy Elfenbein on February 2nd, 2007 at 10:02 am

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