Weekly Economic & Business Outlook

The 20/20 Hindsight of Revisions to Monthly Nonfarm Payrolls

Although the labor market has remained resilient despite an amalgam of accelerating economic pressures, the strength of its resilience has been overestimated to a certain degree. The two most prominent sources for labor market data—the Job Openings and Labor Turnover Survey (JOLTS) and Employment Situation (Jobs Report)—are often subject to revisions based on additional incoming responses received after these reports are published. Integrating additional responses allows the JOLTS and Jobs Report to maintain a minimum sample size which is statistically representative of the broader U.S. labor market.

Revisions to these reports are often positive during periods of greater labor churn, such as during the Great Resignation, and negative during recessions, or periods of less turnover within the labor market. Between 2021 and 2022, initial monthly nonfarm payroll numbers underestimated job growth by 1.8 million but in 2023, these numbers overestimated job growth by 360,000. While long-term trends suggest the labor market remains healthy, with supply and demand imbalances shifting into parity, further downward revisions in Friday’s Jobs Report could indicate a faster cadence of cooling than anticipated, potentially destabilizing a soft landing.

Friday’s Jobs Report could reveal additional downward revisions, fostering increased uncertainty about the real strength of the labor market into the last mile of the Fed’s tightening cycle. But for staffing companies, further downward revisions would simply augment uncertainties among clients and talent that have fostered reduced labor churn. It is important to view initial labor market estimates, both positive and negative, with a grain of salt because recency is not always a proper substitute for accuracy during times of heightened economic uncertainty.

The State of Employee Engagement, And Tracking Trends for Growth

In recent years, the experience of work in the U.S. has seen considerable upheaval. The onset of the Covid-19 pandemic encouraged many companies to adopt remote or hybrid work structures, while the accompanying economic turbulence precipitated significant swings in both layoffs and furloughs, as well as hiring. These rapid changes pose challenges to workers seeking meaning and fulfillment in their jobs, and to managers when contending with shifting trends and expectations in the market.

Gallup has actively studied employee engagement, and their latest research provides insight into current trends. A third of employees were actively engaged in November 2023, compared to 17% who were actively disengaged. Though 33% is high for this metric, it falls below the 36% recorded in January of 2020. There was variation within this headline number: Baby Boomers were the most engaged generation (36%), followed by Gen Z and young Millennials (35%), then older Millennials (32%), with Gen X lowest (31%). Since 2020, only Baby Boomer engagement has increased—all other generations have declined.

What is driving declining engagement among younger workers? Gallup discovered scores fell among Millennials and Gen Z in areas related to connection and growth, such as “having opportunities to learn and grow,” “feeling connected to the mission of the organization,” or “feeling cared about by someone at work.”

Hence, to boost engagement, companies must ensure they are effectively communicating their mission and values to employees, as well as the importance of their contributions to that mission. Companies must also try to understand their employees’ individual goals and support their efforts to reach them. Read more about the Gallup research.