They revised the data?!! Now what?!!!
Too many questions… in that title.
But that’s right, economic data can and will get revised.
That’s how economic reports roll!
Let’s take the monthly Non-Farm Payroll (NFP) as an example.
As stated, this report comes out monthly, and usually included with it are revisions of the previous month’s numbers.
We’ll assume that the U.S. economy is in a slump and January’s NFP figure decreases by 50,000, which is the number of jobs lost.
It’s now February, and NFP is expected to decrease by another 35,000.
However, the incoming NFP decreased by only 12,000, which is unexpected.
Also, January’s revised data, which appears in the February report, was revised upwards to show only a 20,000 decrease.
As a trader, you have to be aware of situations like this when data is revised.
Not having known that January data was revised, you might have a negative reaction to an additional 12,000 jobs lost in February.
That’s still two months of decreases in employment, which isn’t good.
However taking into account the upwardly revised NFP figure for January and the better-than-expected February NFP reading, the market might see the start of a turning point.
The state of employment now looks different when you look at incoming data AND last month’s revised data.
Be sure not only to determine if revised data exists but also the scale of the revision.
Bigger revisions carry more weight when analyzing the current data releases.
Revisions can help to confirm a possible trend change or no change at all, so be aware of what’s been released.
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