BLS Payroll Revisions: Forecasting Recessions

We investigate the behavior of BLS monthly revisions to payroll growth at turning points. We find some evidence corroborating claims by former BLS commissioners and market analysts that revisions around turning points tend to be procyclical and more serially correlated. Furthermore, we do see large revisions before turning points. However, the ability to use revisions to forecast business cycles' turning points seems limited. First, we do see lots of false positives: large revisions occur without a subsequent recession. Second, even within-sample, other indicators, such as initial jobless claims, the Chicago Fed National Activity Index, and the Aruoba-Diebold-Scotti Index, do a better job at detecting recessions. Finally, out-of-sample forecasting performance of revisions is poor.