Before this morning, the analysts’ consensus for new jobs gained in January was 185,000. Today’s report from the Bureau of Labor Statistics almost tripled that prediction. The US economy added 517,000 jobs in January and pushed unemployment down to 3.4%, while the civilian labor force increased by 866,000.

Seem a little too good to be true? Perhaps, especially in the way that labor-force percentages didn’t budge at all. Note the frequent use of the phrases “unchanged” and “little changed” in key areas of the report, emphases mine:

The number of persons jobless less than 5 weeks decreased to 1.9 million in January. The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.1 million. The long-term unemployed accounted for 19.4 percent of the total unemployed in January. (See table A12.)

In January, both the labor force participation rate, at 62.4 percent, and the employment-population ratio, at 60.2 percent, were unchanged after removing the effects of the annual adjustments to the population controls. These measures have shown little net change since early 2022 and remain below their pre-pandemic February 2020 levels (63.3 percent and 61.1 percent, respectively). (See table A-1. For additional information about the effects of the population adjustments, see table C.)

The number of persons employed part time for economic reasons, at 4.1 million, was little changed in January. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. (See table A-8.)

The number of persons not in the labor force who currently want a job was 5.3 million in January, little changed from the prior month. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job. (See table A-1.)

Among those not in the labor force who wanted a job, the number of persons marginally attached to the labor force, at 1.4 million, changed little in January. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was also little changed over the month at 342,000.

How did we add 517K jobs and still leave all of these categories “little changed”? In part, it’s because of the massive add in labor-force numbers, but that would involve 866K workers just deciding to show up in January. Theoretically, that might be an explanation, as it might indicate an abrupt end to the overhang from the Great Resignation and a sudden return to normal work for people who had removed themselves from that status. Not only is that a big jump for January, but the new level is also 1.3 million above the labor force number for November, signaling a major shift. (It’s up 2.2 million year-on-year, according to BLS today.)

However, the same report also shows the Not in Labor Force number increasing at the same time. It’s 560K higher year on year, and 252K month on month. It’s still a significant amount of growth in the labor force, but it’s not moving people back in to that category. It’s as though over 1.2 million people just showed up out of nowhere in January and nearly half of them had jobs, which suggests something may be off in methodology. Don’t forget that these are two surveys, not direct data, and that even these well-established surveys sometimes produce oddities in their results.

And that’s the reason why 517K people could get jobs in the US while having almost no impact on labor-force participation. Does that look real, or like some weird polling artifact?

So what happened? The annual revisions to base data looks to be the culprit, and may account for the entire boost:

Revisions due to both the NAICS 2022 conversion and the benchmark process affected more historical data than typical in the annual benchmark process. The NAICS revisions are reflected for the entire history of affected industries for both seasonally and not seasonally adjusted data. Details of the updated titles and new, discontinued, and collapsed industries (and resulting changes to tables B-1 through B-9) are available at www.bls.gov/web/empsit/cesnewseries.htm.

The total nonfarm employment level for March 2022 was revised upward by 568,000 (+506,000 on a not seasonally adjusted basis, or +0.3 percent). The average not seasonally adjusted benchmark revision (in absolute terms) over the past 10 years is 0.1 percent.

The over-the-year change in total nonfarm employment for March 2022 was revised from +6,425,000 to +7,096,000 (seasonally adjusted). Table A presents revised total nonfarm employment data on a seasonally adjusted basis from January to December 2022.

Statisticians with better depth may be able to explain these changes and the impact they have on today’s report. Let’s just say that this new benchmark may not tell us much at all, except that we’re still adding jobs at some pace.

Add to that the rather mundane 0.3% increase in wages for January. That level of hiring should have generated a wage boost, although to be fair, that sometimes is a lagging indicator. Still, 0.3% is right in line with the 4.4% annualized wage increase reported by BLS today, which is still well below the inflation rate consumers face even now. Nothing much has changed in the trajectory of wages so far, anyway, which is strange in a jobs market this supposedly strong.

And consider the results of the ADP employment report, which is historically more problematic in terms of reliability, but at least extrapolates from direct data in the private sector:

Private sector employment increased by 106,000 jobs in January and annual pay was up 7.3 percent year-over-year, according to the January ADP® National Employment ReportTM produced by the ADP Research Institute® in collaboration with the Stanford Digital Economy Lab (“Stanford Lab”).

The jobs report and pay insights use ADP’s fine-grained anonymized and aggregated payroll data of over 25 million U.S. employees to provide a representative picture of the labor market. The report details the current month’s total private employment change, and weekly job data from the previous month. ADP’s pay measure uniquely captures the earnings of a cohort of almost 10 million employees over a 12-month period.

“In January, we saw the impact of weather-related disruptions on employment during our reference week,” said Nela Richardson, chief economist, ADP. “Hiring was stronger during other weeks of the month, in line with the strength we saw late last year.”

Now, ADP has hardly been a reliable indicator of actual economy-wide numbers. I’ve often written about that here, in fact. But either ADP or the BLS had a very wide miss in January, and ADP isn’t positing the sudden appearance of 1.2 million workers into the US economy in January.

The bottom line in all of this is that the US is clearly not in a recession. That conclusion and this report will have some significant consequences at the Federal Reserve. Jerome Powell had been dialing down the fiscal tightening of late, assuming that the labor market had responded to the interest-rate hikes already put in place. These numbers indicate that the Fed still hasn’t gotten a lid on growth. This will likely push the Fed to add more rate hikes, assuming BLS doesn’t offer a massive correction in its next monthly report.

I’d wait to see the February report before betting on the reliability of this January report.