Previewing Today's 1.5 Million Payrolls Seasonal Adjustment

Tyler Durden's picture

Today's consensus estimate for the non-farm payroll is for a 149K increase broken down as follows among some select banks:

  • Bank of America 115K
  • Deutsche Bank 120K
  • Goldman Sachs 125K
  • Citigroup 135K
  • JP Morgan 140K
  • Barclays 150K
  • UBS 165K
  • HSBC 167K

Why is the expectation so low? Why cold weather of course - the same cold weather that supposedly impacted December and January data. Then again, one wonders just what is the seasonal adjustment factor for if not to adjust for the, gasp, seasons.

So when one puts the February actual number in the context of its average adjustment over the past decade, what does one get? Simple - a boost of 1.5 million "jobs" which exsit nowhere in the real world but in some Arima-X-13 spreadsheet.

The chart below shows what the average seasonal factor by month has been in the past 10 years.

In other words, today's entire pick up in jobs is one tenth of the overall seasonal adjustment factor, which as we know by now is woefully broken since it is so incapable of grasping the simple concept of cold and snow in the winter.

And now you know why today's number is once again meaningless and only there to stimulate HFT algos into buying whether the news is good or bad.