Don't Sweat Tomorrow's Payroll Revisions

Tomorrow, the Bureau of Labor Statistics (BLS) will release its Quarterly Census of Employment and Wages (QECW) for the 12 months ended March 2024. These data are used to revise previous payroll employment reports. They come with a lag, but are generally accepted to be more accurate than the initial monthly releases, which were already revised twice.

The initial 12-month revisions can be large, recently having swung by more than -500,000 (through March 2019) to more than +450,000 (through March 2022). Some forecasters anticipate that tomorrow's preliminary benchmark revision could be as much as -1,000,000, 0r -83,333 per month. We doubt the revision will be that large, and we don't expect to change our stance that the labor market is normalizing from the pandemic tightness but not meaningfully deteriorating. Here's why we aren't worried:

(1) Immigrants excluded. The QECW is based on state unemployment insurance tax records. The unemployment rate calculated based on these figures is available in the BLS unemployment claims weekly report; it has remained flat at 1.2% for months (chart). We've noted that immigrants and new labor market entrants rarely file (or qualify) for this insurance. That means payrolls are likely stronger than the QECW will suggest.