2024 Nonfarm Payrolls Revisions in Context

Given the stakes of guiding the economy to a soft landing, it’s no wonder that every detail of macroeconomic indicators—even revisions to nonfarm payroll data—receives intense scrutiny. While the initial 2024 payroll revisions, totaling a cumulative downward adjustment of 293,000, might sound large, they’re far from extraordinary when considered in historical context.

To be sure, the labor market is in solid shape by almost any measure.  The initial nonfarm payroll print for September of 254,000 beat expectations, vaulting above 100,000 - 200,000 "goldilocks" range held by most economists' comfort zone.  Above this range for an extended period and wage inflation becomes a concern.  Below this range, recession fears loom.  By the way, the three-month average is 185,000 (whew!).

But, again, what about those revisions?  Are this year's adjustments unusually large or unusually negative?

First, some table setting.  Exhibit 1 shows the monthly change in seasonally adjusted nonfarm payroll numbers for 2024 next to any revisions. In aggregate, payrolls grew by 1.8 million so far this year, after revisions.  Yes, revisions brought the initial payroll prints down by a net 293,000.  That's not nothing, but it doesn't qualify as an outlier when looked at in historical context.

Note, too, that the initial prints of the nonfarm payroll data are subject to two programmatic revisions, and while it is true that this year's revisions-to-date have been net negative, they are not unusually negative nor are they unusually large when viewed in historical context. 

To further drive this point home, let's zoom out and put the 2024 revisions in historical context.

Exhibit 1

Historical Context for Payroll Revisions

The Bureau of Labor Statistics (BLS) provides granular data on initial prints and subsequent revisions dating back to 1979. Exhibit 2 offers a view of the magnitude of monthly revisions since then. While there have been periods with more significant revisions—during the stagflation era of the early 1980s, the Global Financial Crisis, and COVID-19—2024 is nowhere near such extremes.

In fact, the size of this year’s revisions aligns closely with historical norms. From 1979 to 2024, the mean absolute value of revisions is 56, and the year-to-date figure for 2024 is 50, suggesting little deviation from the norm.

Exhibit 2

Survey Response Rates: A Developing Concern

However, one issue worth monitoring is the falling response rate to the BLS’s Establishment Survey, which estimates employment changes. Response rates have declined to the mid-70s, down from the mid-80s, potentially increasing volatility in the initial payroll figures. For now, the declining participation doesn’t seem to have caused any major distortions, but it’s a factor that could complicate future readings.

So, while the revisions in 2024 appear typical from a historical perspective, the lower survey response rate is a trend that may warrant attention moving forward.