On nonfarm payroll (NFP) day the Wall Street Journal reports on some myth busting from BoA/ Merrill Lynch
Myth 1: Seasonal factors for a given month are wrong because they do not match the previous year's seasonal factors.
- False, says Boa/ML ... they shouldn't match ... seasonal factors change -many holidays, for example, land on a different day each year, and weather changes
Myth 2: The birth-death model is inflating the jobs data.
- False again they say, and a common mistake.
Myth 3: Months with five weeks tend to overstate payroll growth.
- You guessed it, false ... the BLS has refined its seasonal adjustment process to neutralize this factor.
Myth 4: Net revisions to nonfarm payrolls show an upward bias.
- And now for something completely different ... confirmed says BoA/ML, this one is true! Looking back over the past two decades, there is a clear pattern of upward revisions to nonfarm payrolls figures
I've summarized the article quite brutally here, there is a lot more detail, and its ungated if you'd like to check it out
