Employment Data Revisions: The Latest Insights into the U.S. Labor Market | Moomoo Research

QCEW Data Release:On August 21, the U.S. Bureau of Labor Statistics (BLS) released the Quarterly Census of Employment and Wages (QCEW) data for Q1 2024 and revised the nonfarm payroll data for March 2024 accordingly. As of the end of Q1, the QCEW showed a total of 153.58 million jobs covered by unemployment insurance, a 1.35% year-over-year increase. In comparison, the unadjusted nonfarm payrolls totaled 157.21 million, up 1.92% year-over-year. Based on this, the nonfarm payroll data for March was revised down by 818,000 jobs, approximately -0.5%.

Market Expectations:This downward revision was within market expectations, indicating that job additions were weaker than anticipated but still showed some resilience. The revised job numbers will be spread across the past 11 months through a backcasting model, averaging about 68,000 fewer jobs per month.

Revision History:The final revision for 2024 will be determined after the full-year QCEW data is released in February 2025. It is important to note that initial revisions often show a larger downward adjustment than the final revisions the following year.

Sources of Discrepancy:The differences between the nonfarm payroll data and QCEW mainly stem from their different statistical scopes. QCEW does not include self-employed individuals, whereas nonfarm payroll data does. Additionally, nonfarm payroll data is more likely to include undocumented immigrants, which could contribute to the discrepancies.

Impact of Revisions:The release of QCEW data and the downward revision of nonfarm payroll data suggest that the labor market is not as robust as previously indicated. Nonetheless, the U.S. labor market in 2024 is unlikely to enter a recession, with rising unemployment rates primarily due to an oversupply of immigrants rather than a rapid economic downturn.

Fed Rate Cut Expectations:The July FOMC minutes hinted at a potential rate cut in September. A majority of officials believed that if the data continued to evolve as expected, easing monetary policy at the next meeting would be appropriate. Some officials expressed concern that delaying rate cuts or not cutting rates enough could risk an excessive slowdown in economic activity and employment.

Market Reaction:Following the data revisions, the stock market and the U.S. dollar index experienced short-term declines, while the 10-year Treasury yield fell. As rate cut expectations strengthened, the market continued to trade with a rate-cut bias, suggesting that short-term Treasury yields and the dollar index might continue to decline.