After the release of the weaker July nonfarm payrolls report, many experts have expressed doubts about the accuracy of the data. The report showed that nonfarm payrolls only increased by 114,000, falling short of economist expectations. Additionally, the unemployment rate unexpectedly ticked up to 4.3%, causing concern among investors and analysts.
Some experts have pointed out distortions in the data that may have contributed to the weak numbers. Derek Holt of Scotiabank Economics called the numbers “bogus” and attributed the weakness to pandemic-era seasonal adjustment factors. These factors have muddied the traditional seasonal adjustments used by the Fed to filter out distortions like an annual hiring surge by retailers or a slowdown in construction hiring.
While some experts, like Jefferies, agree that the seasonal adjustment process in the post-pandemic era has presented challenges, they believe that the adjustments in the July nonfarm payrolls report were typical for July. Jefferies stated that there is no evidence to suggest that the seasonal adjustments skewed the headline figures in this particular report.
Derek Holt of Scotiabank Economics suggested that if the pre-pandemic seasonal adjustment factors had been used for the July nonfarm payrolls report, the numbers would have shown an increase of about 200k instead of 114k. This reevaluation raises questions about the effectiveness of pandemic-era adjustments and their impact on the accuracy of the data.
The July nonfarm payrolls report has sparked debate among experts about the reliability of the data and the effectiveness of seasonal adjustments in the post-pandemic era. While some believe that the seasonal adjustments were typical for July, others question the accuracy of the numbers and suggest alternative adjustment factors. As investors and analysts continue to analyze the data, the true impact of the July nonfarm payrolls report remains uncertain.