Data We Need: Previewing the Employment Report
After last month’s payroll employment report, confusion reigned. Some focused on the fresh September results. Some cited the revisions to August job growth and suggested adding the two months together. Finally, the BLS benchmark revisions, poorly understood by market participants, added another element of surprise.
CNBC’s Steve Liesman, usually calm and analytical, insisted that the market needed and deserved better data than the BLS was providing. There was so much at stake that we should "spend more" on these reports, if necessary.
While this viewpoint is, no doubt, widely shared, it is completely wrong-headed. There is no way to count every job in the economy each month, no matter what we tried to spend on it. The survey method is excellent, as surveys go, and has been improved significantly with the addition of the birth/death model.
There is no practical way to get the data we think we need, at the time we want it.
So we go ahead and trade anyway! It is the best information we have. We cannot do better.
In part III of this series we’ll provide a forecast.