One thing to note about the monthly payroll numbers is that they always get revised by the Bureau of Labor Statistics — twice — in the months that follow, as better data flow in. The news that the economy added 200,000 jobs last month is just a preliminary estimate. We won’t really know what happened in December until February.
Why does that matter? Because in 2011, the initial jobs numbers typically got revised upwards. By a lot. If you only paid attention to the initial monthly estimates, then the U.S. economy added 1.38 million jobs last year. But when you take final revisions into account, the economy actually added 1.64 million jobs — and that’s not including final revisions for November and December.
Remember how, back in August, there were a lot of doomy headlines about the fact that August had added zero net jobs? That was just an initial estimate. When the final revisions quietly surfaced two months later, it turned out that we’d actually added 104,000 jobs in August. Likewise, after revisions, September turned out to be a better month — with 210,000 new jobs — than today’s December report. But while today’s report has been greeted with euphoria, September was seen as a dud at the time: the initial numbers said we had only added 103,000 jobs.
Why are the initial payroll estimates off? Jason Lange of Reuters has a nice piece trying to figure this out. What happens is that many businesses are a little tardy in sending in their responses to the government surveys — and once these stragglers report in, the numbers tend to nudge upward. But why should this happen so consistently? It’s a mystery. One possibility is that the government’s models appear to assume that the future will be just like the past — which may cause them to underestimate the pace of job growth during recessions.
In any case, that’s just a warning that we likely won’t know how many jobs the economy actually added in December until two months from now. But there’s a decent chance the numbers could turn out to be better than expected.
