CICC reported on September 3 that in the past decade, the U.S. government has underestimated the number of job growth in August almost every year, which makes it more difficult for the Federal Reserve to judge whether the non-farm employment report to be released on Friday (September 4) can send a signal that the Federal Reserve is preparing to raise interest rates.
The Fed said in July that before raising interest rates, there is a need to see signs of further improvement in the labor market. The August employment report released tomorrow (September 4) will be the last monthly employment report before the Federal Reserve's policy meeting from September 16 to 17.
However, like many economic indicators, employment data will be revised later because of the late time of the employer submitting the questionnaire and government statistics reevaluating the seasonal fluctuations in the data.
8 non-farms were frequently revised, which may be the tangle of the Federal Reserve's interest rate hikes
A Reuters analyst pointed out that between 2005 and 2014, August was the lowest month for employment growth assessment, compared with the employment revision data released in the following two months.
During this period, the U.S. government found that compared with the initial value, the average number of non-farm employment increased by more than 58,000 in August. Revisions were only made in August 2005 and 2008.
According to a Reuters survey, market participants and economists expect the number of non-farm jobs announced on Friday is expected to increase by about 220,000, the same as the number of jobs in the past few months. "The risk of unexpected decline in employment in August seems to be far greater than the surprise risks," said Harm Bandholz, an economist at UniCredit, Italy. Despite its flaws, several Fed policymakers have recently hinted at the importance of non-farm reports. Many analysts believe this could be a key factor in whether the Fed raises interest rates in September, although the Fed is also paying attention to turbulence in global financial markets.
The U.S. Department of Labor admits that the initial value of non-farm employment in August may be revised above. The correction has spanned significantly across multiple industries, but the most common is seasonal factors, said John Mullins, an economist at the Bureau of Labor Statistics.
Seasonally adjusted data is important because it can provide relevant information on the potential economic strength. For example, construction sites will lay off employees in winter. Only when layoffs exceed those when the weather is cold can the direction of the economy be hinted.
The key problem faced by government statistics is that seasonal factors are constantly changing. Mullins said in an email that the adjustment of seasonal fluctuations in the education sector in August could be particularly tricky as many schools changed their school opening dates in the fall.
html August is not a separate phenomenon, at least since the last recession. Except for June and April, the average monthly non-farm employment has been revised above since 2010. In 2010, the U.S. job market began to recover after the economic recession between 2007 and 2009.During the recession, almost average monthly employment values were downgraded.
It is not clear why the business cycle may affect data corrections. However, around the recession, August is usually a month of upward revision. Between 2010 and 2014, the Ministry of Labor found that the number of jobs in August was revised to more than 76,600.
