Jobs: You Might Want to Pay Attention to the Revisions

Mike Maharrey Mike Maharrey

Mike Maharrey

January 8th, 2024 Comments

Every month, we get a “strong” non-farm payroll report with a big headline number. Every month the market reacts with a  stock market drop, a spike in dollar strength, and a selloff in gold, all in anticipation that the Federal Reserve will respond to the strong labor market by leaving interest rates higher for longer.

And every month, the Bureau of Labor Statistics (BLS) revises previous months' job numbers lower.

That’s the part nobody pays attention to.

For December, the BLS reported 216,000 new jobs. This was far higher than the 170,000 new jobs projected and resulted in the aforementioned knee-jerk reaction from the markets.

And then there were the revisions.

The BLS revised the November jobs number down to 173,000. It was originally reported as 199,000 new jobs. At the time, this was reported as “slightly better than the 190,000 Dow Jones estimate.” But we now know the real number was a big miss. It wasn't "slightly better" than the estimate. It was "way worse."

The BLS also revised October’s number down to 105,000 new jobs created. The BLS originally reported 150,000 new jobs created in October.

 That’s 71,000 jobs that just “poof” disappeared with no fanfare.

 And this isn’t an anomaly.

 The BLS revised 10 of the last 11 non-farm payroll reports lower.

Job revisions

Notice the pattern.

By the way, the fantastic December jobs report wasn’t that great when you dig into the numbers. A big chunk of those new jobs were government jobs (52,000). There was a record 1.5 million crash in the number of full-time jobs. The labor force participation clicked downward. And we have more and more Americans working multiple jobs trying to make ends meet.  (Every time some guy starts delivering pizzas at night on top of his day job to keep up with rising prices, that counts as a new job.)

But that’s not even the point.

Even if we take the BLS numbers at face value and cheer because the economy created more jobs than projected, history tells us that the agency will revise those numbers down next month, and there’s a pretty darn good chance that December's “beat” will turn into a miss.

And nobody will notice.

The markets only react to the initial numbers. You never see a gold rally because the BLS erased a bunch of jobs from the economy with a few clicks of its calculator. The revisions happen quietly in the back alleys. Nobody pays any attention to them. That creates the illusion that the labor market is much stronger than it actually is.

So, why should we trust any of these numbers, much less make decisions based on them?

And notice that the revisions are always down. If the BLS was making honest mistakes month after month, you would think sometimes they would underestimate the number of jobs created. But they always overestimate the numbers. If you flipped a coin and it came up heads 10 out of 11 times, you’d start to wonder about the integrity of that coin, wouldn’t you?

Again, it’s important to wrap your head around the pattern here.

This month, the government reports good news. Everybody celebrates. Markets move. The following month, the government quietly revises everything downward and reports that the good news was really bad news.

And nobody pays attention.

It might be a good idea to pay attention -- to the revisions too. Things aren’t nearly as rosy as the headlines would indicate.

Mike Maharrey

About the Author:

Mike Maharrey is a journalist and market analyst for with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.