Tomorrowâ€™s Non Farm (NFP) numbers are doubly important, for what they show of January jobs -- the median estimate is 50,000 -- and for what they may show for revised numbers for December and November.
Each monthly statistic is revised twice and issued with the NFP release in each of the subsequent months. The November number has been revised once from 94,000 up to 115,000. It will be revised a second and last time tomorrow.
For pessimists the 18,000 jobs created in December were a confirmation that the economy is slipping into recession; optimists are waiting for the revisions, the first of which is tomorrow.
Has there been any pattern in the revisions over the past year and a half?
In the 16 months before December 2007, the final NFP statistic was revised higher in ten months and lower in six. The average upward revision was 61,200 and the average downward revision was 25,700. A total of 458,000 jobs were added by revisions.
But the adjustments in the first ten months, from August 2006 to May 2007 were quite different from those in the past six months from June 2007 to November 2007.
In the earlier period there were seven upward revisions and three downward. The up revisions averaged 70,400, and the down revisions 6,000. Revisions added a total of 475,000 jobs.
However, in the past six months, June through November of last year, the situation has changed. In these months the up and down revisions are evenly split, three up months, July, August and November, and three down June, September and October. The average up revision was 39,700 and the average down revision was 45,300. Revisions subtracted 17,000 jobs during this period.
Does this matter? Have the odds for a downward revision increased in the past six months. Probably not. The three month moving average was 76,700 in September, in October it was 98,700, and in November it was 106,000. The lowest month is almost 60,000 higher than Decemberâ€™s first release of 18,000. When the initial statistic is so far from the average in a non random series the revisions will tend to bring the number closer to the average. We expect an upward revision of 50,000 to the December NFP and 65,000 for the January payroll.