It’s all about jobs today…
8:30: Employment report for Jan…weather versus the fundamentals. Estimating the change in payrolls in January is an exercise in weighing the positive trend in fundamental factors against the depressing effects of unusually cold and snowy weather. Goldman has an original estimate of +175k predicated on the view that the weather effects would not be large, but further analysis helped by classification of the storm that passed through during the survey reference week as a major storm suggests the potential for a larger effect. At the same time, the labor market data themselves, including claims, ISM employment indexes, and online help-wanted indexes, suggest further improvement. Goldman decided, on balance, that these trends were offsetting, but there is clearly a lot of uncertainty surrounding this number. To aggravate the situation, this report will incorporate a benchmark revision to the March 2010 level of payrolls that the Labor Department estimated last fall at -366k; this often has the effect of reducing estimated net changes in the months following the benchmark.
Meanwhile, the unemployment rate has its own statistical issues, as about half of the 0.4-point drop reported last month reflected another decline in the labor force. We and others look for a partial reversal in this report.
Finally, we expect average hourly earnings to remain subdued.
On total payrolls, median forecast (of 85): +146k, ranging from -50k to +230k; last +103k, GS: +175k;
On unemployment, median forecast (of 81): 9.5%, ranging from 9.2% to 9.6%; last 9.4%, GS 9.5%;
median forecast (of 52): +0.2%, ranging from +0.1% to +0.3%; last: +0.1%, GS +0.1%;