Of Nowcasts and Revisions

Don’t pay too much attention to the headline change in employment.

The accounts of the employment release focused on the net change in April (above consensus), but more nuanced assessments noted the downward revisions. The following two graphs highlight the distinction between growth rates and levels. The first graph shows differences.

Figure 1: Month-on-month growth rate of private nonfarm payroll employment, April release (bold black), March release (dark blue), Bloomberg consensus of 5/5 (pink square), and author’s nowcast based on ADP (sky blue), all calculated as log differences. Source: BLS via FRED, Bloomberg, author’s calculations. 

The actual change in private NFP growth exceeded the Bloomberg consensus shown relative to unrevised March. In this sense, the announcement surprised. (My nowcast based on ADP numbers far exceeded actual.). The actual m/m change was 0.17%, compared to 0.12% Bloomberg, and 0.27% in the ADP-based nowcast.

The previous months were revised down (as shown in the black line). In levels, the picture is quite different. The second graph:

Figure 2: Private nonfarm payroll employment, April release (bold black), March release (dark blue), Bloomberg consensus of 5/5 (pink square), and author’s nowcast based on ADP (sky blue) +/- two standard errors (gray lines). Source: BLS via FRED, Bloomberg, author’s calculations. 

Figure 2 demonstrates that, despite the upside surprise on the April change in private NFP, the actual level is lower than the Bloomberg consensus implied (assuming no prior month revisions – we actually don’t know what the forecasters thought about this point).

The ADP based nowcast is off by 0.206% (274 thousand), of which 0.105 (139 thousand) are accounted for by revisions.

Clearly, net job creation is slowing, with 3 month trailing moving average is down to 182K/mo from 271K/mo at January.


10 thoughts on “Of Nowcasts and Revisions

  1. Karen James

    NFP should be down around 150k. It’s pretty clear the warm weather and surge in consumer spending in January led to misleading headlines all over the place including inflation. This reversed the next 2 months as expected, with a small reversal in April as 2nd week easters tend to pop spending in April rather then March a bit.
    I suspect normalization of inventory in the 2nd/3rd quarter will boost nfp slightly.

      1. JohnH

        Is pgl capable of making a comment without delivering an insult? So many insults, so little constructive commentary.

        1. pgl

          Awwww – I must have hurt little Jonny boy’s feelings. Or were you looking on the mirror?

      1. Moses Herzog

        It’s a good bet he’s used more than two, and has crossed swords with you before. You might try one of those plagiarism AI software to see if you can pin it down. Ed Hanson?? Kopits?? Stryker?? None of them are above playing the coward’s game. You can say having 1 pseudonym is near as bad as having two, but I would argue at least pgl, Macroduck and I are consistent on representing our real feelings about things 98% of the time telling the truth about our “IRL” lives, and not contradicting our own viewpoint to “have our cake and eat it too”.

        Speaking for myself, I feel I probably told too many negative things (in the name of honesty) about myself, without worrying terribly I had give away my read ID. Namely because none of my close friends have interest in Economics/finance, and would never read such a blog. My idiot sister, for example, might listen to NPR, but only the whiny “woke” shows which had very little math. She actually believes “Big Bang Theory” is intelligent “nerdy” writing.

  2. James

    Now that inflation is coming down – the GOP is screaming recession and trying to crash the U.S. economy by refusing to follow their duty (14th Amendment) – meanwhile the Dems build back U.S. economy from another GOP recession and reduce U.S. deficit https://simonwdc.substack.com/p/the-may-jobs-report-us-economy-remains Of course – GOP Senator Dingbat or GOP Governor Hayseed says the way to fix the economy is that the poors need to tighten their belts and put 14 years to work. And – no – I am not being hyperbolic https://www.commondreams.org/news/2021/11/02/rather-pass-wage-increases-gop-legislatures-move-weaken-child-labor-laws

  3. pgl

    The NRA’s new slogan – guns don’t kill people, antidepressants kill people


    After the mass shooting at a Texas mall that killed eight people on May 7 – the latest mass shooting to horrify the United States– Rep. Marjorie Taylor Greene repeated the common right-wing claim that antidepressants could be responsible.

    She blamed the shooting at Allen Premium Outlets on “mental illness, drugs, and evil forces” and said it was necessary to “study SSRI’s and other factors that cause mass shootings,” referring to selective serotonin reuptake inhibitors, a type of antidepressant.

    Greene has previously made similar comments linking antidepressants to mass shootings, as has former Fox News host Tucker Carlson

    “A lot of young men in America are going nuts. Are you surprised? And by the way, a shockingly large number of them have been prescribed psychotropic drugs by their doctors, SSRI or antidepressants, and that would include quite a few mass shooters,” Carlson said during one of his shows last July.

  4. Moses Herzog

    Just continuing on with my blather farther up above—-

    What middle aged guys would admit to still enjoying “The A-Team” TV show?? I might as well tell the blog my maturity halted at age 6. That’s one of the things that always made me angry at Barkley. What adult says “I like the A-Team” when they are trying to impress someone with a pseudonym?? Wouldn’t that kill the entire point?? But I guess some people think it’s more impressive to LIE [“Russian insiders told me…..” “The main theory on the origination of Covid is now…… ” ] under their real name, than tell the truth under a pseudonym. Myself~~I will take the latter.

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