‘It’s just atrocious’: Jobs data snafu stirs fury on Wall Street

NEW YORK - There’s no shortage of market-moving events on the docket to keep Wall Street busy right now. 

But even as traders and analysts game plan for Federal Reserve chairman Jerome Powell’s Jackson Hole speech and then Nvidia’s earnings and economic-growth data next week, many of them are stuck on Aug 21’s botched government release of jobs data and the way it sowed chaos across stock and bond markets.

And they didn’t mince words.

“It’s just atrocious,” said Mr Glen Capelo, a managing director at Mischler Financial Group. “There’s a big problem,” said Ms Claudia Sahm, chief economist at New Century Advisors. “It’s crazy,” said Mr Andrew Brenner, head of international fixed income at NatAlliance Securities.

The problems began when the Bureau of Labour Statistics (BLS) failed to release a key revision to jobs data at 10am as had been expected.

That error was compounded when BLS officials then began to provide the data – which showed that job growth estimates will be marked down significantly – to analysts who called up the agency. 

So for a few excruciating minutes, a handful of firms, including BNP Paribas and Mizuho Financial Group, had the data while everyone else was left in the dark as markets shot higher and lower. Rumours flew, with some regurgitating the correct number and others spreading incorrect figures. The BLS finally released the data on its website a little after 10.30am, when it showed that the number of jobs created in the year through March was likely to be revised down by by 818,000, the most since 2009.

The staccato swings in stocks and bonds made it difficult for anyone who had managed to get the number to profit from it, but that is little solace for NatAlliance Securities’ Mr Brenner. To him, the price action in some parts of the Treasuries market – like five-year and seven-year notes – made clear to him that some were trading off the data. “No question about it,” he said.

The botched release is just the latest in a series of embarrassing mishaps. 

In May, the BLS inadvertently published consumer-price data 30 minutes early. A month before, records showed an agency economist answered numerous inquiries from major Wall Street firms on details of data related to the inflation gauge, raising questions about the selective release of information. And in late 2022, stock futures surged in the moments before an inflation release – spurring speculation that the number had been leaked.

Hair-trigger financial markets have been rattled, of course, by all sorts of things over the years. Hoax press releases and premature corporate releases have frequently set off market moves. But US government data plays an outsized role in shaping the perception of the economy, making any breach or shortcoming a major cause of consternation.

A spokesperson told Bloomberg on Aug 21 that the agency’s inspector general has been asked to look into what happened, saying “the integrity of our data releases is BLS’ top priority and we are closely reviewing our procedures to ensure this does not happen in the future”.

The data involved usually does not generate much interest outside economic circles.

This time, though, it drew far more attention. Both stocks and bonds had been gaining in recent weeks, with speculation the labour market is cooling so much that the Fed will finally start cutting interest rates. The figures wound up helping to confirm that picture, showing that the government had actually overestimated the number of jobs that had been created. BLOOMBERG