BLS Payrolls Benchmark Revision to Reveal Slower Job Growth

The annual revision of the Bureau of Labor Statistics' payrolls benchmark is expected to show less robust job creation in the US. The revision could reveal a lower seasonally adjusted level of nonfarm payrolls, which may indicate a less rosy picture of the labor market. This could have implications for economic forecasts and monetary policy decisions.

The annual revision of the Bureau of Labor Statistics' (BLS) payrolls benchmark is set to provide a more nuanced view of the U.S. labor market. Expected to be released on September 9, this revision could reveal a significant downward adjustment in the seasonally adjusted level of nonfarm payrolls for March 2025. Economists from Wells Fargo and Evercore ISI predict a reduction ranging from 475K to 790K, with Evercore's Stan Shipley suggesting a drop of around 625K [1]. This could indicate a less robust job creation scenario than previously reported.

Federal Reserve Governor Chris Waller has expressed concern about the potential implications of these revisions. He estimates that monthly job creation could be reduced by approximately 60K, suggesting that private-sector employment may have contracted in May, June, and July. Waller was one of two Fed governors who dissented from the Federal Open Market Committee's decision to maintain the federal funds rate target range at 4.25%-4.50% [1]. He and fellow Fed Governor Michelle Bowman favored a 25-basis point cut, reflecting their view that the labor market is weaker than the reported numbers suggest.

The BLS uses the Quarterly Census of Employment and Wage (QCEW) data from tax filings for unemployment insurance to revise the March benchmark annually. Last year, the March 2024 payrolls benchmark was revised down by 598K, or ~0.4%, and in 2023, it was revised down by 187K, or ~0.1%. Wells Fargo Senior Economist Sarah House attributes the overestimation to sampling and non-response errors inherent in surveys. This year's revision is expected to be less fraught, as the unemployment rate has been relatively stable since last July [1].

The potential downward revision in payrolls could cast a shadow on the true strength of job growth since the beginning of the year. Bill Adams, chief economist at Comerica, also expects the labor market to look weaker with the preliminary benchmark revision [1]. This revised data could have significant implications for economic forecasts and monetary policy decisions.

The Philippines, on the other hand, is adopting a "Goldilocks" economic strategy with a 5% interest rate cut in 2025, aiming to balance low inflation and strong domestic demand to attract foreign investors. The country is positioning itself as a strategic destination for foreign investment, particularly in the semiconductor sector, which accounts for 60% of its total merchandise exports. The Bangko Sentral ng Pilipinas (BSP) has enhanced policy predictability with Fed-style announcements and plans further rate cuts to 4.75%, targeting export-driven industries amid global trade risks [2].

In conclusion, the upcoming payrolls benchmark revision is expected to provide a more accurate picture of the U.S. labor market, potentially revealing a weaker job creation scenario. This could influence economic forecasts and monetary policy decisions. Meanwhile, the Philippines is leveraging its strategic location and economic reforms to attract foreign investment, particularly in the semiconductor sector, positioning itself as a compelling destination for global investors.

References:
[1] https://seekingalpha.com/news/4491311-payrolls-annual-benchmark-revision-expected-to-point-to-more-subdued-job-creation
[2] https://www.ainvest.com/news/philippines-monetary-policy-investment-opportunities-global-trade-uncertainty-strategic-entry-points-foreign-investors-goldilocks-economic-environment-2508/