Labor market data overhaul imminent as Powell's speech may change due to "new numbers"

According to the Wisdom Financial APP, LPL Financial stated that concerns about the US economy falling into a recession have eased recently, but investors will closely watch a labor market report this week to determine whether their initial economic concerns are justified.

The US Bureau of Labor Statistics plans to release the preliminary benchmark revision of institutional data for 2024, which will include non-farm employment data from April 2023 to March 2024. LPL Financial stated on Monday that investors have noticed Federal Reserve Chairman Powell increasingly referencing the Fed's maximum employment requirement when discussing monetary policy. The revision will be released before the start of the Fed's annual symposium in Jackson Hole, Wyoming on Thursday.

Quincy Krosby, Chief Global Strategist at LPL Financial, stated in a report, "The market has recently experienced a growth scare, leading to concerns about a sluggish Fed response. The market will focus on the benchmark revision data released on Wednesday to see if the market's initial reaction was correct."

She said, "If the (Bureau of Labor Statistics' benchmark revision report) shows a significantly lower number of new job additions than initially reported in the monthly employment report, the Fed Chairman's concerns may be amplified in his comments."

Affected by concerns of an economic recession, the S&P 500 index began to rebound after falling more than 8% from its historical high in July. The recent weekly initial jobless claims (an important indicator of labor market trends) have helped alleviate concerns about an economic recession. However, ongoing claims for jobless benefits "indicate that the labor force is having difficulty finding new jobs."

She said, "Powell has stated that the Fed is closely monitoring signs of deterioration in the labor market and is prepared to take intervention measures when necessary."

The US Bureau of Labor Statistics stated that annually, institutional survey estimates are benchmarked to comprehensive employment numbers derived from the Quarterly Census of Employment and Wages (QCEW) in March.

Stephen Stanley, Chief US Economist at Santander Bank, recently published an introductory article on benchmark wage revisions. "In my view, a significant downward revision seems possible, but its magnitude could be moderate (as was the case a year ago) or quite large," he said.

Stanley added, "Furthermore, while backward inference is straightforward, negative revisions from April 2023 to March 2024 do not necessarily tell us the current state of the labor market."