On Wall Street, analysts increasingly don’t believe the U.S. government’s ‘misleading’ job numbers
Jamie Cox, managing partner of Harris Financial Group in Richmond, Virginia ($1.3 billion in assets under management), had a visceral reaction to the U.S. Bureau of Labor Statistics’ June jobs numbers: “This data is misleading and should be disregarded,” he emailed. Luck. “There is zero chance of a negative impact on entertainment and hospitality in the middle of the World Cup. Higher revisions will come in the next few months.”
He is not alone.
Analysts and economists at major banks and financial institutions increasingly say they do not believe the numbers. In part, this is a routine function of the way the U.S. government collects economic statistics. It takes time to collect all the survey data needed to describe hires (nonfarm payrolls in official language), and the BLS publishes a series of revisions to its numbers as the months go by.
Therefore, it is normal not to believe the first number. Figures will always be revised later as scattered data sets and survey responses come in. This chart from Pantheon Macroeconomics shows the scale of revisions over time (usually downward):
But this time, the jobs data included a seemingly counterintuitive number: The leisure and hospitality industry lost 61,000 jobs in June, the BLS reported; even though the United States hosts the biggest sporting event on the planet, the World Cup.
Is it really possible that dozens of football matches followed by hundreds of thousands of local fans and foreign tourists have resulted in fewer people being employed in hotels, bars and restaurants?
Pimco economist Tiffany Wilding said the industry was “actually expected to benefit from World Cup hiring.”
RSM Chief Economist Joe Brusuelas said in an email that the report should be treated with “some caution.” “We expect an upward revision to the June revenue forecast when July data is published,” he said.
There is good evidence that the World Cup has stimulated economic activity recently. From this chart Bank of America It shows that card spending in the group stage of the cup increased by 5.4% on an annual basis. “The increase is primarily due to ‘non-locals’ coming to cities for games, whose spending increased by 17.4%,” Liz Everett Krisberg and David Tinsley of the BofA Institute wrote in an email. he said.
“The US jobs report was a useful reminder not to place too much emphasis on a single unreliable data release,” said Paul Donovan. UBS he said in an email this morning. “There have been notable revisions, and the details have shown fluctuations in seasonal adjustments that move the figures quite discordantly. The trends are still the same. In an uncertain policy environment, companies seem reluctant to hire, but they are also in no rush to lay off.”
