On a cumulative basis since January of 2022, LinkUp’s NFP forecasts are off from BLS revised data by 0.8% while ADP is off by 11.3% and consensus estimates are off by 22.6%.
And specifically pertaining to the worsening reliability of ‘official’ government data, BLS revised its 2022 data downward by a total of 132,000 jobs while downward revisions in 2023 so far have totaled 355,000 jobs.
So on that note, we couldn’t possibly agree more with the article’s (and Donovan’s) conclusion:
Investors should brace for more of this. Shifts such as working from home and new job categories like social-media influencers aren’t captured in much of the data, Donovan points out.
The timely data that drives markets on a day-to-day basis has become less reliable. The response rate for the survey of 651,000 businesses behind the payrolls data was steady at about 60% before the pandemic, but has since dropped to just 42%.
It’s even worse for the important Job Openings and Labor Turnover Survey used to work out how many vacancies there are and how many people are quitting their jobs. Investors have followed it fanatically over the past two years as a gauge of the labor market. The response rate has more than halved to just 32%.
Investors should be aware of this uncertainty, and try to back up any position based on economic data by checking other data and surveys too. Anecdote can help a little, but can also lead to too much focus on one’s own social group. Understanding the details of the data can help…But ultimately narratives drive markets, and one has to be really sure the narrative is based on a mistake to take the opposite view.
The only additional point we’d make is that in regard to the ‘other data’ mentioned above, one need look no further than LinkUp and our entirely unique job openings data - millions and millions of job openings that we index every single day directly and solely from employer websites around the world - the most accurate and timely source imaginable.
It is that data - comprised of actual job openings posted on company and employer websites rather than ineffective surveys or insanely polluted job board data - that arms us and our clients, investors included, with the ability to accurately forecast the U.S. job market.