There’s one caveat to keep in mind about Friday’s surprisingly large U.S. payrolls and wage gains: the response rate from businesses was the poorest since January 2002.
The collection rate for the establishment survey, which informs both the payrolls and wage figures, dropped to 49.4% in November, the worst preliminary result in over two decades and the lowest November reading since 1988.
The slide between the October and November preliminary collection rates was the largest monthly change in data back to 1981.
“It definitely adds a pretty large dose of caution in interpreting the numbers,” said Julia Coronado, president of MacroPolicy Perspectives LLC. “It certainly suggests that the data are going to be subject to greater degree of noise, to possible revisions down the road and it just highlights the need to really look at the broadest set of indicators you possibly can to take the temperature of the labor market.”
The number of response-collection days typically ranges from 10 days to 16 days and spans the number of business days after the 12th of the month through the Monday of the week the employment report is released, according to an economist at the Bureau of Labor Statistics.
Last month, when taking into account the Thanksgiving holiday, there were just 10 collection days. And the decline in the response rate was widespread across industries, according to the BLS.
The agency frequently revises the data, and collection rates improve markedly between the preliminary release and the second release, with even further improvement typically seen by the third estimate. For instance, in September, that rate ultimately improved from 72.8% to 95%.
September payrolls were first reported as rising 263,000 and then revised the following month to 315,000. The latest revision saw September job growth at 269,000 — close to where it was initially reported.
“For what’s it worth, BLS finds little correlation between low response rates and the absolute magnitude of revisions,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., said in a note.
The low response rate may lead people to question the reliability of the better-than-expected payrolls gain and the 0.6% monthly jump in wages, which was double what economists had expected. It’s unclear whether the low response rate will equate to larger-than-usual revisions in the months ahead.
