The sleeper in Thursday’s US economic data releases was a downward revision to unit labor costs for Q1.

I realize that sounds rather dry, but it’s important for the macro narrative and thereby for monetary policy.

As originally reported, ULC rose 6.3% in the first quarter, markedly quicker versus Q4 and more than economists expected. Revised data released on Thursday showed the increase was a much more subdued 4.2%.

Economists expected a more trivial revision (from 6.3% to 6%).

Naturally, the productivity readings were also revised in the right direction. Productivity fell 2.1% in Q1 versus the originally reported 2.7%.

Output was brisker than initially flagged, hourly comp rose far slower than the preliminary reading suggested and the YoY ULC print was revised down by two full percentage points to show a 3.8% gain versus the originally-reported 5.8%.

Arguably, these revisions were just as important for the Fed as this week’s claims data and the ADP report, which showed private sector hiring was more robust than anticipated in May. Indeed, rates appeared to move on the ULC and productivity revisions, reversing the knee-jerk reaction to the ADP headline.

The revisions should be considered with Wednesday’s remarks from Patrick Harker and Philip Jefferson, who made the case for a pause at this month’s FOMC meeting. With the obligatory caveat that NFP and CPI will ultimately decide when the Fed pauses, it’s these sorts of under-the-radar indicators that the Fed (and rates) watch for nuance.