Non-farm payrolls: Analysts believe US government jobs numbers ‘misleading’
Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia (with assets of just under $1.3 billion), had an obvious reaction to the June jobs number from the US Bureau of Labor Statistics: “This data is misleading and should be ignored,” he said in an email to Good luck. “There is no time for leisure and hospitality to be posted negatively during the World Cup. A top review in the next few months is coming.”
He is not alone.
Increasingly, analysts and economists at major banks and financial institutions say they don’t believe the numbers. In part, this is a standard function of how the US government collects economic statistics. It takes time to gather all the survey data needed to define employment (nonfarm payrolls, in official parlance), and the BLS publishes a series of updates to its numbers as the months pass.
So disbelieving the first figure is par for the course. The numbers will be updated over time as more data sets and survey responses come in. This chart from Pantheon Macroeconomics shows the scale of revisions over time—usually downward:
But this time, there was a number in the jobs data that, on its face, stood out as elusive: The leisure and hospitality sector lost 61,000 jobs in June, the BLS reported, even though the US hosted one of the biggest sporting events in the world—the World Cup.
Is it really possible that a large number of soccer matches, followed by hundreds of thousands of home fans and foreign visitors, somehow resulted in fewer people being employed in hotels, bars and restaurants?
Pimco economist Tiffany Wilding said the sector “was expected to benefit from World Cup employment.”
RSM Chief Economist Joe Brusuelas said in an email that the report should be taken “with a grain of salt.” “Expect an upward revision to the June top-line estimate when the July data is released,” he said.
There is good evidence that the World Cup has stimulated the economy recently. This chart from Bank of America shows that card usage was up 5.4% year-over-year in the league. “Growth is driven primarily by ‘non-locals’ who come to the cities for sports, whose incomes are up 17.4%,” BofA Institute’s Liz Everett Krisberg and David Tinsley said in an email.
“The US employment report was a good reminder not to focus too much on one unreliable data release,” UBS’s Paul Donovan said in an email this morning. “There have been significant revisions, and the data showed seasonal changes are moving the numbers in the wrong direction. The trends are still the same. In uncertain policy environments, companies seem reluctant to hire, but they’re also not in a rush to fire.”
At EY-Parthenon, Chief Economist Gregory Daco was also surprised by the weak reception number, although he insists it may be wrong. “The biggest black eye in June came from the leisure and hospitality sector which shed 61k jobs – the biggest drop since the pandemic – in seasonally weak hiring, despite the World Cup boom,” he said in an email.
Overall, the US economy added 57,000 jobs in June, about half the number expected, the BLS reported yesterday. The Financial Times suggested that the incredibly weak hospitality numbers explain why the consensus rating was wrong:
“There may be a way to explain the bad month, however. Tourism and leisure employment may have been expected to rise in June, ahead of the North American edition of the World Cup … But, ironically, the sector crashed, losing 61,000 jobs,” wrote Robert Armstrong.
“Statistics? It’s possible, and if you take out the loss of visitors, we’re talking about a good four-month trend.”
