US non-farm payrolls the main focus, but have the numbers been severely overestimated?

<p>This is pretty much a rehash from my post earlier but perhaps it deserves a second shout.</p><p>"Are the job figures that are reported being severely overestimated?</p><p>That could definitely be the case, if <a href="https://www.wsj.com/amp/articles/labor-market-headfake-key-report-could-be-overestimating-job-growth-c7ea020" target="_blank" rel="nofollow noopener noreferrer">this</a> report by the Wall St Journal is anything to go by.</p><p>The case in point made is that the monthly labour market report consists of two surveys – one being the payroll survey and the other the household survey. Typically, we focus on the former as it does cover a bigger sample size and it usually is the more reliable indicator of labour market conditions.</p><p>However, this may not be one of those typical times. One major oversight of the payroll survey is that it is not able to capture "businesses it doesn’t yet know exist, or whether a company that doesn’t respond to the survey is ghosting it, or has closed, until many quarters later, when tax data become available".</p><p>In other words, when the economy is starting to weaken considerably and we transition to more business closures, the model might "erroneously count jobs that haven’t actually been added".</p><p>Pantheon Macroeconomics claims that this could lead to a higher payroll figure by as much as 30K but others are fearing it might be worse. UBS is claiming that at the end of last year, payrolls could be overstated by "several hundred thousand" with Standard Chartered also supporting that view in saying that "it's more than 50% likely that it's an overestimate" and that number could be "as much as a couple of hundred thousand jobs a month".</p><p>That's definitely some food for thought."</p><p>It is definitely something up for consideration, not just in interpreting what these numbers mean for the economy but also how they should be viewed when looking at the Fed outlook.</p><p>Some previews ahead of the big report later today:</p><ul><li><a href="https://www.forexlive.com/news/by-the-numbers-june-non-farm-payrolls-preview-15-in-a-row-20230706/" target="_blank" rel="follow">By the numbers: June non-farm payrolls preview. 15 in a row?</a></li><li><a href="https://www.forexlive.com/news/shockingly-strong-jobs-numbers-from-the-us-on-thursday-goldman-sachs-shrugs-them-off-20230707/" target="_blank" rel="follow">Shockingly strong jobs numbers from the US on Thursday – Goldman Sachs shrugs them off</a></li></ul>

This article was written by Justin Low at www.forexlive.com.