February jobs report very good, if it holds

If you look at Friday's US jobs report, you'd think that America's economy is having a historical booom.

Total nonfarm payroll employment rose by 273,000 in February, and the unemployment rate was little changed at 3.5 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in health care and social assistance, food services and drinking places, government, construction, professional and technical services, and financial activities.

The change in total nonfarm payroll employment for December was revised up by 37,000 from +147,000 to +184,000, and the change for January was revised up by 48,000 from +225,000 to +273,000. With these revisions, employment gains in December and January combined were 85,000 higher than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 243,000 per month over the last 3 months.

Even wages, which had leveled off in recent months, had a nice jump in February.

In February, average hourly earnings for all employees on private nonfarm payrolls increased by 9 cents to $28.52. Over the past 12 months, average hourly earnings have increased by 3.0 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 8 cents to $23.96 in February. (See tables B-3 and B-8.)

The average workweek for all employees on private nonfarm payrolls rose by 0.1 hour to 34.4 hours in February. In manufacturing, the workweek increased by 0.2 hour to 40.7 hours, and overtime edged up by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.1 hour to 33.7 hours.

The longer work week is also a strong sign, meaning that

And the stock market responded by... dropping more than 800 points before having a bunch of day-end buying to "only" lose 250. Part of that is due to the fact that coronavirus concerns are clearly hurting the tourism and business travel economy as conferences and events get canceled, and the supply chains get messed up. So any job gains that may have happened 3 weeks ago have little effect on the outlook for companies.

_ Ouch on the PMIs https://t.co/88Oh5xF5tx pic.twitter.com/jKcDEbQ4AS

— Richard Baldwin (@BaldwinRE) March 8, 2020

But I also wonder if part of it is because maybe those great jobs numbers aren't really that great. I say that because the "gold standard" Quarterly Census of Employment and Wages that came out this week showed that yet again, prior job gains in the monthly reports were overstated.

Job growth Sept 2018-Sept 2019
Monthly Reports +1.86 million (+1.5%)
QCEW +1.49 million (+1.2%)

That likely means the prior months will go down by 370,000. And that's after a downward revision in the monthly reports of 514,000 that was revealed last month.

We saw a similar story with the country's productivity figures, which came out last week for Q4 2019, but also used the QCEW to make revisions for Q3. And those revisions were to the down side, especially when it came to compensation to workers.

Which leads me to say that while we have to go with the data that is available, let's not assume that the great jobs report of February is going to continue to look so good as more refined data comes in over the following months. And that may be why the economy doesn't seem to have the strength that the current numbers indicate that it does.