Wednesday, February 8, 2012

This post (and employment data) will be revised

The recent employment report has been a great point of contention between the bulls, bears, and the black helicopter crowd. I won't rehash the report but there's something I mentioned in a previous posting about employment seasonality that caught my attention.

The beginning of a new year brings a large number of layoffs as seasonal workers for the holiday shopping rush are released.  As you can see from this first graph the non seasonally adjusted data and adjusted data vary greatly right now.
Total nonfarm payroll 
The difference is rather obvious to see but lets transform the data a bit and look at the difference between the normalized and raw data.

Subtracting one from the other exposes just how much the raw data can vary from the the adjusted data in an attempt to smooth out the seasonality of the data.  As can be seen we are at the peak of this delta and it will most likely be revised in the future due to the fact we are that noisiest point in the data collection period.  Will it be revised up or down? I haven't a clue, but I'm going to watch it and report to you how much these data series change over time.  Stay tuned.

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