The Average March "Seasonal Adjustment" Factor: +824,600
While still gripped in the bearhug of the warmest winter/spring period seemingly in history, and with virtually everyone now having woken up to the realization (two months delayed) that winter seasonal adjustments when April falls in February may not be the most appropriate way to adjust Non-seasonally adjusted data, we would like to demonstrate the seasonal adjustment factor by month over the past decade. The first chart below shows the annual difference between the NSA and SA number from 2002 to 2012. The second one: just the average. The bottom line is that in the January-March period, there are, on average, 4,413,000 jobs "added" purely due to seasonal adjustments. And while these seasonal adjustments may be appropriate when winter is indeed winter, they are far more difficult to justify when summer falls in the middle of winter. Furthermore, it also means that if indeed we get the +200,000 NFP number that many expect today, this would mean 2012 YTD has added a total of 711,000 jobs. Putting this number in perspective, this is 16.1% of just the seasonal addition over the same period. In other words: jobs added solely in the confines of some opaque excel spreadsheet based on historical patterns, pre 75 degrees in February. Finally, the March BLS number of +200,000, if indeed it comes there, will be 24% of just the shotgun average March seasonal adjustment which has averaged to 824,600 jobs over the past decade. Yet things finally change in April, when seasonal adjustments hardly have an impact on the NSA number, and then in May things get from bad to worse, when the Seasonal Adjustment will for the first time every year, subtract 670,100 jobs from the NSA number. Appropriately enough, this will come just before the June FOMC meeting. Finally, should the NFP number be a major beat, it merely makes US-based QE that much more unlikely until and unless we get a major disappointment in payrolls.
Monthly seasonal adjustment to Nonfarm Payroll number over past decade:
Average monthly seasonal adjustment to Nonfarm Payroll number over past decade: