Longtime readers may remember March 2012, when I pointed out that the US Bureau of Labor Statistics revised upwards significantly Atlanta’s labor data from throughout 2011. Prior to March 2012, Atlanta was still thought to be mired with ongoing job losses.
Metro Atlanta’s total employment estimate was increased by 75,000 jobs. In the world of economic data, this is a startlingly huge revision; it was the biggest piece of economic news the city had been dealt in years.
The BLS data revision changed the trajectory of the metro area. Many of the positive things we’ve seen since then–including a near doubling in the pace of homebuilding, dozens of speculative apartment projects, and even an office development or two–are directly influenced by strong job market data. The effects ripple throughout other areas of the economy, too: more store and restaurants open as a result of stronger job data, and Atlanta properties are targeted for renovation and reinvestment at much faster rates than before.
There’s an element of self-fulfilling prophecy to this, too: all of these new projects that were kickstarted by the BLS data revisions require more workers, which serve to bolster the economy further.
In short, the annual revisions to the local area labor data are extremely important.
What Is Benchmarking?
Throughout the year, the Georgia Department of Labor and the BLS release monthly snapshots of the local labor market. The monthly reports use immediate indicators and surveys to estimate the level of employment. Over time, these methods are prone to under- or over-estimation of job growth, particularly during recessions and recoveries. To correct this, each year the US BLS revises its employment benchmarks: basically, it assesses all of the different indicators of economic activity to completely revise its estimation of what the current employment level is. Then it revises the previous monthly preliminary estimates to make them jive with its best guess at the current labor situation.
(In case you found the above paragraph especially gripping, you can find everything you ever wanted to know about benchmarking, and then some, here.)
In 2011, it turned out the BLS was underestimating job growth to the tune of tens of thousands of jobs–enough to turn the perception of Atlanta in the business community from laggard to a strong performer.
Benchmarking: 2012 Edition
There’s no telling what the folks at the BLS will determine happened in Atlanta last year, of course. But that doesn’t mean we can’t speculate.
One thing looks certain: we won’t get anywhere near as much of a boost as we did in 2011. Throughout 2011, the number of jobs estimated by the payroll job survey (the more important survey) was zilch or negative, while the household survey showed strong gains of about 50,000 jobs. The 2011 benchmark revision showed the household survey was in fact right.
From December 2010 to December 2011 Atlanta added 50,000 household jobs and 35,000 payroll jobs, according to the revised data. From December 2011 to December 2012, Atlanta has added 55,000 household jobs and 37,000 payroll jobs. In other words, the mismatch between the two surveys doesn’t seem to be an issue this year, perhaps indicating the benchmark revisions will be modest.
Nonetheless, the revised data will be one of the most important economic releases of the year for metro Atlanta. Gains or losses on the order of 10,000 jobs–very large, in other words–are entirely possible. We just have to sit back and wait.
The number I’ll be most eagerly looking for is the Revised December 2011 job estimate. The preliminary estimate is 2,371,500 jobs. The revised estimate will use the new benchmark.
Although the date of the new benchmark release is unknown, it could happen as early as Thursday.