Jobs Market Revisions Reveal Weaker Performance Than Expected

The Bureau of Labor Statistics (BLS) lowered its estimate of job losses by 818,000 in its preliminary revision of its Current Employment Statistics (CES). Although this substantial revision gives a clearer picture of the jobs market, further reductions to the official employment data are expected next month. The BLS will release its final benchmark revision in January.

This preliminary and final revision process, done annually, aims to bridge the gap between the monthly BLS survey data used for initial reporting and data from each state’s unemployment insurance program. While this process produces more accurate results, it recently revealed a weaker jobs market than investors perceived. The Federal Reserve Bank of Philadelphia warns that the 2024 final CES could result in even more downward revisions, with all but eight states contributing to lower revisions. This is because estimates by the Federal Reserve Bank of Philadelphia indicate that employment changes from March through June 2024 were significantly different in 27 states compared with preliminary state estimates from the BLS. Early benchmark (EB) estimates indicated lower changes in 25 states, higher changes in two states, and lesser changes in the remaining 23 states and the District of Columbia. These data revisions, although not immediately captivating for investors, are crucial for asset prices. Monetary policy significantly influences asset prices. The potential for pausing further rate cuts into next year could impact short-term market sentiment, presenting a risk given the current excessive bullishness, with investors piling into stocks heading into year-end. Despite many optimistic assumptions, breadth has been deteriorating noticeably. From the NYSE Advance-Decline line to the percentage of stocks trading above their respective 50 and 200-DMA, overall participation is declining rapidly

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