The Philly Fed recently released its revision of the Q2 jobs numbers, and the result is a shocking adjustment of 1.1million jobs in the wrong direction. This is a very high number, which brings the number of jobs created from the original of 1,121,500 down to just 10,500.
How does an adjustment this large happen, and what does it mean? Well, the ‘non-farm payrolls’ number that grabs most news headlines regarding the country’s employment is based on a combination of the “Establishment Survey” and the “Household Survey” which both measure different things, with the Establishment survey being less volatile, but not taking into account people with multiple or part-time jobs. In June, the gap between these two measurements was about 1.5million, while traditionally they track very close, with a few thousand between them.
This seems to indicate a spike in more households having someone working two or more jobs, which while it adds to the total payrolls numbers in the Establishment Survey, could indicate a much weaker labor market than expected. The gap between the two surveys has jumped to 2.7million in November.
Only time will tell what this means for the overall economy, as subsequent Fed revisions won’t happen for 3 to 6 months.