QCEW Watched For Preliminary Payrolls Benchmark Revision (1/2)

The Quarterly Census of Employment and Wages (QCEW) for 1Q23 is due on Aug 23 at 1000ET. It will provide the preliminary annual benchmark estimate for the establishment survey data, i.e. including the level of payrolls, over the twelve months up to March 2023.

• The magnitude is important with some analysts expecting a circa 500k drop in the level of payrolls employment, but the exact magnitude plus timing of when these revisions land will only be known with the finalized benchmark revision published Feb 2024.
• The 2021 edition of the QCEW revisions wasn't particularly impactful, but the 2022 QCEW revision pointed to an undercount of nonfarm payrolls of 462k between March 2021 and March 2022.
• In other words, the labor market was even stronger than realized in real time, with the recovery from the pandemic being faster and of a bigger magnitude than previously appreciated.
• Arguably, and in hindsight, this contributed to the Fed tightening too little, too late.
• This time, if downwardly revised, it could provide some support to Fed doves who according to the June 2023 meeting minutes noted that recent payrolls may have overstated the strength of the labor market (bolding is MNI's): "Some participants pointed out that payroll gains had remained robust but noted that some other measures of employment—such as those based on the Bureau of Labor Statistics' household survey, the Quarterly Census of Employment and Wages, or the Board staff's measure of private employment using data from the payroll processing firm ADP—suggested that job growth may have been weaker than indicated by payroll employment."