Philly Fed Revises Job Growth Lower by Over a Million for Second Quarter of 2022

The Federal Reserve Bank of Philadelphia has revised the number of new jobs created in the second quarter of 2022 down by more than a million, prompting a Bloomberg market expert to issue a warning.

In its Q2 Vintage Early Benchmark Revisions of State Payroll Employment released last Tuesday, the Philadelphia Fed reports that actual job growth was “significantly” different than the number reported by the Bureau of Labor Statistics (BLS):

“Estimates by the Federal Reserve Bank of Philadelphia indicate that the employment changes from March through June 2022 were significantly different in 33 states and the District of Columbia compared with current state estimates from the Bureau of Labor Statistics’ (BLS) Current Employment Statistics (CES).”

As a result, the initial sum-of-the-states count of jobs added was inflated by more than a million, according to the new report:

“In the aggregate, 10,500 net new jobs were added during the period rather than the 1,121,500 jobs estimated by the sum of the states; the U.S. CES estimated net growth of 1,047,000 jobs for the period.”

“Our estimates incorporate more comprehensive, accurate job estimates released by the BLS as part of its Quarterly Census of Employment and Wages (QCEW) program to augment the sample data from the BLS’s CES that are issued monthly on a timely basis,” the Philadelphia Fed notes.

Pres. Joe Biden

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While the initial CES report provides estimates more quickly, the methodology used to create last week’s revision incorporates much more data, the Philadelphia Fed says:

“The CES provides a timely estimate of monthly state employment data, but the QCEW follows about five months later with a more complete picture, covering more than 95 percent of all employers. Our methodology was adapted from an approach pioneered by the Federal Reserve Bank of Dallas and modified to accommodate all 50 states and the District of Columbia.”

On Monday, Bloomberg Senior Editor for Markets and Opinion Columnist John Authers characterized the revision as a “startling finding” that could prompt the Federal Reserve to continue to raise interest rates:

“The Philadelphia Fed’s Early Benchmark Revisions of State Employment Data provided this startling finding with regard to job growth during the second quarter: 

“In the aggregate, 10,500 net new jobs were added during the period rather than the 1,121,500 jobs estimated by the sum of the states; the U.S. Current Employment Statistics estimated net growth of 1,047,000 jobs for the period.  

“If employment has been overstated this seriously, then the bears may well be right, and further Fed tightening would be very dangerous. Expect this to be a critical issue for the next few months.”