Joe LaVorgna, who yesterday raised his NFP estimate from 100,000 to 175,000 was off only by a factor of 972% (and who can forget his 300,000 NFP forecast from last month two days before the final number ended up being a revised 25,000). Here is his, uh, "explanation."
There was very little positive news in the June employment report as job gains were paltry, the unemployment rate rose, the work week declined and average hourly earnings were unchanged. Headline payrolls rose just +18k following downward revisions to the prior two months: April was lowered to +217k from +232k and May was reduced to +25k from +54k as previously reported. The weakness was broad?based within the underlying categories. In the goods sector, construction shed ?9k jobs versus ?4k previously and manufacturing rose just +6k compared to ?2k in May. Private service?sector hiring also slowed significantly (+53k vs. +70k previously), as net layoffs occurred in financial services (?15k vs. +14k), temp workers (?12k vs. ?2k) and auto dealerships (?1k vs. +4k). Government layoffs continued (?39k vs. ?48k).
The unemployment rate backed up another tenth to 9.2% as household unemployment was unchanged but household employment declined by ?445k (vs. +105k previously). The length of the workweek declined a tenth to 34.3 hours and average hourly earnings were unchanged in the month. We are hard pressed to find any redeeming qualities of this report, which did not reflect the improvement in the manufacturing ISM or the ADP data. If the soft?patch in hiring does not improve in July, the outlook for second half of the year will diminish.
But, but, but Joe.... This is not at all what you predicted yesterday:
As we warned in yesterday’s note, our June payroll forecast was susceptible to revision pending the results of the ADP report given the recent improvement in that series’ forecasting track record. The ADP results were much better than expected, so we are raising our payroll forecast. ADP employment rose by +157k in June following a modest downward revision (-2k) to May. Over the last four months, the average miss on ADP has been just 43k, but these misses have all been in the same direction, to the low side. Thus, if we assume a similar forecast miss, this is consistent with a 200k increase in private payrolls. With the public sector shedding on average -25k jobs per month, headline nonfarm payrolls should come in at +175k. Previously, we were forecasting +100k. Our forecast of a one tenth decline in the unemployment rate (to 9.0%) remains intact.
Joe: please, tell us... We beg you... What is the secret? How do you have the absolutely worst forecasting record in the history of Wall Street and still keep your job? How do you do it? If you trademark it you would make gobs more money than using the excel goalseek function month after month with results so wrong that it boggles the mind.