Revising history
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Why did the non‑farm payrolls report come in far weaker than expected?
So I'm sure you already know the news. The non-farm payrolls came in low on Friday in the United States with massive downward revisions for the previous two months. Donald Trump's response sacked the head of the agency that collects the data, even though it's actually going to deliver the rate cuts that he wants. But now he has a chance to add his own person into the Fed, with uh one member resigning effective the end of this week. So, on the back of all of that, a whole lot of market activity on Friday. Let's see how it all shakes. down today. It's Mondays the fourth of August twenty twenty five. It's the morning call from Nab. Good morning. Well, quite a day on Friday with US two year treasury yields down twenty seven basis points to three point six eight percent, down almost sixteen basis points for ten years, down to four and a quarter percent.
Uh the US dollar fell naught point eight percent on the DXY down to ninety nine point one. The winner was the Japanese yen up two point two percent, the euro gained one and a half percent, the Aussie up about naught point eight percent to sixty four point seven four US cents, the pound up naught point six percent, and equities. In the red, just about everywhere for Friday and for the week. Uh worst on the day on Friday was the DAX down two point seven percent compared to just a uh naught point six percent fall for the C S I three hundred. Worst for the week was the Russell two thousand down four point two percent compared to the ASX two hundred, which was only just in the red last week. Uh even the Nasdaq in the midst of the earnings season fell two point two percent last week.
And big falls in oil. On Friday, WTI down two point eight percent, Brent down three point nine percent, copper was down a third after the news that tariffs uh would be dropped on uh non-finished copper products, which we talked about uh on Friday's edition. But that wasn't the big news. Uh you'll know the news already. Non-farm payrolls came in substantially weaker, and President Trump's response was to sack the head of Labour Statistics for fake news. Uh Nab's uh Ray Atrill uh is with me this morning. So it wasn't so much the July number, was it, that that was the main concern, although that was below consensus. It was this downward revision, substantial downward revision, uh to the two months prior.
How did the massive downward revisions for May and June impact the average payroll figure?
Have we ever seen such a downward revision in the past? Um
Well we have seen a pattern in the last sort of twelve to eighteen months of consistent downward revisions, but um in answer to the question I think no in terms of the scale of the revisions. So, you know, just to to illustrate those numbers, as you say, seventy three K was the headline for July, but the May number is revised from one hundred and forty four thousand down to nineteen thousand and the June number from one hundred and Forty seven thousand to fourteen K. So that means that the average of uh the last three months is now just thirty five thousand. Yeah. So it's uh I I can't recall as big a revision as that. And sort of deep
Well that's like a ninety per over those over those two months, or you put the three months together, so at least like a ninety percent reduction, isn't it?
Absolutely. So if you think about it, the level of non farm payrolls in July was two hundred and ninety thousand below where the market thought it would be, you know, ignoring the risk of revisions at least anyway. And and sort of digging into the reasons with this, um and obviously there's been a pattern that we've talked about sort of at NOSI with other surveys, the University of Michigan being obvious one, but um the establishment survey, which is a survey of firms, which is is a compulsory survey for those firms that are required to fill it in. But there does seem to be that there's a sort of a pattern of a lot of people filling it in late. So the initial response rate on which those first numbers are reported, you know, is much lower than the ultimately they get ninety to ninety-five percent of of uh of those that are required to fill it in do actually do so.
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Chapters
8 chapters
1
Why did the non‑farm payrolls report come in far weaker than expected?
0:01–2:04
2
How did the massive downward revisions for May and June impact the average payroll figure?
2:04–4:34
3
What was the market reaction to President Trump’s dismissal of the BLS head?
4:34–7:04
4
How did the Fed‑board resignation and potential appointments affect rate‑cut expectations?
7:04–9:33
5
Why did the US dollar, Treasury yields, and commodities all fall after the jobs data?
9:33–11:41
6
What do the long‑term unemployment numbers reveal about labor market health?
11:41–14:09
7
How might the latest tariffs and OPEC supply decisions pressure global inflation?
14:09–16:22
8
What are the possible spill‑over effects on the RBA, BoE and other central banks?
16:22–18:20