BLS payroll revisions: Forecasting recessions

Abstract

We investigate the behavior of BLS monthly revisions to payroll growth at turning points. We find evidence corroborating claims by former BLS commissioners and market analysts that revisions tend to be larger around turning points. In contrast, evidence that revisions have higher serial correlation around turning points is limited. Similarly, the ability to use revisions to forecast recessions seems limited. Even within-sample, other readily available indicators do a better job at detecting recessions. Out-of-sample forecasting performance of revisions is poor.