This page has been archived and commenting is disabled.
Credit Suisse Previews The Most Important Payroll Number Today (That You Never Look At)
Credit Suisse' head of US rates Carl Lantz previews today's NFP report from the perspective of one data series that gets virtually zero mention in the media: The Data Collection Rate.
The most important payroll number today (that you never look at)
Each month the BLS tells us, buried in an oft-ignored table, what percentage of businesses surveyed returned a response in time for the first payroll print. Despite payrolls remaining an intensively revised number (part of the reason we usually advocate fading an overreaction in the market), this data collection rate has climbed steadily over the years. The attached chart shows the first-print data collection rate for October going back to 1981. Collections have risen from about 40% to above 70% over this period.
If today's number is to have near-full credibility we should see the collection rate around 74% - the current trend level. It is very likely that this collection rate will be lower due to the technical difficulties in receiving incoming electronic surveys during a period (the government shutdown) when many BLS systems were turned off.
October collections have generally clung to the uptrend seen in the chart with the notable exception in 2001 where presumably disruptions related to the 9/11 attacks had an impact on collections. The ultimate revision to this number was +88k.
Another big drop occurred after huricane Katrina. Collections were well below trend in the autumn of 2005. The worst collection rate then was in November 2005 (presumably lagged effects of business disruptions) and the ultimate revision from the first payroll print was +120K.
While payrolls should be much "cleaner" than the u-rate as furloughed government workers will be counted as employed in the former but not the latter, we need to look at the data collection rate to see just how clean this dirty shirt actually is.
- 6396 reads
- Printer-friendly version
- Send to friend
- advertisements -



AKA.....the blood out of a turnip index.
It must be an incredibly challenging profession to constantly being trying to make champagne from horse piss. Their is no more a creative mind than an excellent liar.
120k gives us the same job growth we had in 2011 and far below 2012, wihch averaged 205k per month.
I cannot wait to hear how that is positive.
http://www.reuters.com/article/2013/11/05/column-markets-saft-idUSL2N0IP1QW20131105
The QE deflation puzzle
Tue Nov 5, 2013 3:00pm EST
By James Saft
Nov 5 (Reuters) - When it comes to creating inflation, bond buying by central banks may actually ultimately be counterproductive.
Called quantitative easing, it continues to be a mainstay of the policy reaction to the ongoing economic malaise. Yet here we are five years later and the evidence that QE can kindle inflation, much less revive the economy, is decidedly mixed.
In part that may be because everyone realizes that QE isn't forever: ultimately the bonds the bank buys will have to be repaid. It is also true - and here we can consider the remarkable valuations of Twitter and Pinterest - that QE causes bad investments, which ultimately must be deflationary.
With U.S. inflation rising just 1.2 percent year on year in September, well below the Fed's 2.0 percent target, bond buying by the Federal Reserve will continue - a bit like the old joke about beatings carrying on until morale improves.
Very radical increases in bond buying in Japan under Abenomics - more or less a pledge to buy and buy assets until inflation reaches 2 percent - has also had only mixed success so far, with core inflation flat in the year to September. That this, the first time Japan core inflation hasn't fallen outright since the end of 2008, is seen as a victory is itself a bit of an indictment of extraordinary monetary policy.
Dangerously falling inflation in the euro zone has prompted calls for the ECB to join in the bond buying, despite its signal lack of success elsewhere. The ECB is arguably already engaging in QE as its program of providing long-term financing to banks often leads to banks buying government bonds themselves.
So, QE everywhere, and everywhere unsatisfactory inflation and at least the threat of falling prices. Could there be a relationship? Part of the failure of QE may be explained by the fact that as a percent of broader money supply the amounts involved are small. Banks must lend and businesses invest or QE will be swamped.
In some ways, all of the inflationary effects of QE are short-lasting and liable to reversed. Not only is everyone involved aware that ultimately the bonds are not being bought and burned, but bought and held, and thus must be repaid or will be sold by central banks.
Also, QE encourages private investors to gamble a bit, perhaps leading to poor choices.
"Unproductive investment is by nature ultimately deflationary," Michaela Marcussen, global head of economics at Societe Generale, wrote in a note to clients. "This is a point also worth recalling when investing in paper assets fueled by QE liquidity and not underpinned by sustainable economic growth."
LOL the compulsive chartist in me sees that graph and says we are soon going to see a major uptick or collapse in the number of reporting businesses while the small, remaining realist part of me says "Who cares?"