Together with the data on employment situation in January 2025, we also got the annual benchmark revisions. Why is an annual benchmark revision needed? Just … "to reflect comprehensive counts of payroll jobs for March 2024. These counts are derived primarily from the Quarterly Census of Employment and Wages (QCEW), which counts jobs covered by the Unemployment Insurance (UI) tax system".
Net net, right now payrolls seems to be neutral in the short term. The GDP growth forecast for Q1 according to the Atlanta GDP Now model has not changed after taking into account the latest employment data (the GDP forecast is still +2.9%, but the growth of PCE consumer spending has fallen from 3.0% to 2.8%, and at the same time we have a higher growth of Investments (GDPI), which after the employment data increased to 6.2% (from 5.2%).
But in the medium term the employment revision is negative, because the labor market is definitely weaker. Figure 1 shows the change in the employment level, Figure 2 the change in monthly changes, and Figure 3 the change in the 3-month averages. The change in the annual change looks the weakest... for December 2024 it was +1.42% before the revision, and only +1.27% after the revision - which means that we are closer to a potential recession/slowdown. See Figure 4.
Figure 5 shows the monthly change in payrolls (after the revision), it is worth paying attention to the large decrease in the monthly change (from 307k in December to 143k in January).
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