Summary:
- US payrolls to be revised down by approximately 360,000 according to the Bureau of Labor Statistics.
- 306,000 fewer jobs likely created in the specified time period, signaling unexpected strength in the labor market.
- Federal Reserve unlikely to be significantly affected by the lower-than-expected payroll numbers.
- Economic indicators like PMI numbers and new home sales are indicating a mixed economic landscape.
- Jay Powell expected to maintain a cautious stance on raising rates, considering the varied economic data.
The Bureau of Labor Statistics just out with payroll revisions and it's going to be revised, it will be revised down by about 360,000 in the preliminary estimate. Joining us now from Morris Boomberg is Michael McKee. Mike, can you put this number into context for us, please?
Yes, every month the Bureau of Labor Statistics reports on the number of jobs that were created by surveying companies around the country. And then once a year they go back and look at the tax records those companies have to file and then they can rebalance the numbers to get a more accurate count. It only goes through March of this year, the year prior from March to March and as you mentioned 306,000 fewer jobs likely created during that time period. It will be officially attributed to various months at the beginning of the year and each month probably will be a little bit lower but it is smaller than expected, the drop smaller than expected by economists. So it does suggest that there is still strength in the labor market and that what we saw over the last year was not any kind of mirage.
Mike is there a horse just out of shot? I'm wondering is it there? Am I about to hear it kind of winnowing? The hats I think is very impressive, it goes very well with the jacks. You are perfect. The Jackson Hole setup works very well. It is an incredible image. I don't really know how to talk about the data when you are in such a fantastic place with such a fantastic hat on but I must. Is this number bigger or smaller than we anticipated? Is this ultimately going to change the trajectory for the Fed in any shape or form? No, because it came in lower than expected and it basically means that by month there may be 20 to 25,000 fewer jobs but remember we were creating during that time period around 300,000 jobs a month. So at this point it isn't really going to have a major effect.
What is going to be interesting for the Fed is they take a look at these PMI numbers and of course we will see next week what the ISM shows us. And then you take a look at new home sales. We are getting this bifurcated economy where there is strength in some areas, weakness in other areas. We are expecting the long and variable lags to hit now so there should be some weakness but it is not across the board. So what do you do about raising rates at your next meeting? And I would think that Friday we will hear Jay Powell say we are just going to keep an eye on things. We don't have to decide until September 21st. We will look at all the data.