An Absurdly Large Outlier in the History of BLS Revisions

Monday, October 09, 2006 | 06:49 AM

OK, let's have a quick look at Friday's NFP:

Yes, we know that 51k new jobs stink; No, it was not a "perfect number" (Attention Mark Zandi: please lay off the Psilocybin before airtime).

Notable beneath the awful headline was the even more astounding adjustment:  Payrolls for the 12 months ended in March 2006 will be revised higher by 810,000

Thanks to this adjustment, the BLS now claims that job growth during the 12 months ended in March 2006 was 45 percent higher than previously reported. The revision magically adds payroll employment growth between March 2005 and March 2006 up by a 67,500 per month.

This was the biggest revision since the Labor Department started benchmarking in 1991.  To make a comparison, "the aggregate benchmark revisions dating back to 1996 added a whopping 1,555K jobs to the economy, 810K of which (52%) were added during April 2005-March 2006!"

Reuters noted that: "The historical average for the benchmark revision over the prior 10 years has been plus or minus two-tenths of one percent...BLS currently is researching possible sources for this larger-than normal expected revision."

This benchmarking is 100% larger than the largest prior numerical revision, and 50% larger than the prior percentage revision:

Ces_bench

The ironic thing is that even after this revision, this still remains the worst job creation cycle in the post WWII era . . .

~~~

I need to do some more research into how credible (or INcredible) this revision is. But at first blush, it is an absurdly large outlier relative to prior benchmarking in BLS revisions . . .

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Nfp_revisions




 

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Sources:
Jobs Report Shows a Mixed Picture
Growth in Payrolls Slows,But Some Wages Increase;

Rate Shift Appears Unlikely
CHRISTOPHER CONKEY
October 7, 2006; Page A3
http://online.wsj.com/article/SB116013687106084804.html

U.S. jobs picture stronger with expected revisions
Reuters, Fri Oct 6, 2006 10:16am ET
http://tinyurl.com/js8x8

CES Preliminary Benchmark Announcement
BLS, October 6, 2006
http://www.bls.gov/ces/cesprelbmk.htm

Monday, October 09, 2006 | 06:49 AM | Permalink | Comments (14) | TrackBack (1)
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» NFP: Retiring the Over/Under Bet from The Big Picture
About two years ago, I mentioned on Squawk Box that I was taking the Under on Non-Farm Payrolls. Since that appearance, you may have heard Steve Liesman or Mark Haines or Larry Kudlow talk about the Over or the Under. It was a cute device that made fun... [Read More]

Tracked on Nov 3, 2006 7:11:03 AM

Comments

I believe what the revision allows them to do is to increase their net births/deaths adjustment for the current period.
I would bet a lot of money that Katrina has something to do with that adjustment.

Posted by: The Hube | Oct 9, 2006 8:49:30 AM

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