Previewing Tomorrow's Payroll Report

Tyler Durden's picture

The median estimate for tomorrow's all-important report is a +100k change in non-farm payrolls (up from last month's +69k) with Stone & McCarthy topping the table at +165k and Jason Schenker of Presitge Economics all doom-and-gloom at +35k. Everyone's favorite permabull-coz-of-QE3-advocate, Joe LaVorgna, is a more negative-than-consensus +75k and Hatzius et al. at Goldman just notched it up to +125k; but we focus on what Morgan Stanley's David Greenlaw has to say as they appear to have the best handle on just how significant an impact the weather has had on job growth data. Most importantly, given the Fed's admitted focus on the labor market, this is the last employment report before the End-of-July FOMC fireworks.



David Greenlaw, Morgan Stanley: Jobs & Fireworks

The BLS releases the June employment report on Friday. We look for a 90,000 rise in payrolls and an unchanged unemployment rate of 8.2%. When we first published our forecast a couple of weeks ago, it seemed that the consensus estimate for payrolls might be a bit higher. But, as of this morning, the consensus is identical to our own forecast.


Payroll growth has moderated quite a bit in recent months.


Two factors appear to be at work. First, unusually mild weather conditions during the winter months clearly contributed to a sharp pickup in job growth. Indeed, data from the National Oceanic and Atmospheric Administration indicate that average temperatures across the US, on a population-weighted basis, were warmer than normal every single week from early November to late April. This is an incredible string of mild weather that helped to avoid a portion of the typical seasonal cutbacks in employment that occur every winter. Over the past couple of decades, the year that appears to be most similar from the standpoint of heating degree days deviation was the winter of 2005-06. In that case, payroll gains were elevated during the winter months followed by an obvious weather-related payback in the spring.



Secondly, there also seems to have been some underlying deterioration in labor market conditions of late. It will take a few months to sort out the relative impact of weather and the underlying fundamentals, but the recent uptick in jobless claims suggests that there has been some deterioration in conditions. Indeed, on a 4-week average basis, initial claims for unemployment insurance rose by 12,000 between the May and June survey periods – one of the worst performances seen during the current recovery. So, even though the negative weather-related influence in recent months should now be waning, we look for another subpar payroll gain in June and are becoming increasingly concerned about the trajectory of job growth going forward.


Friday’s employment report will be the last one issued before the July 31/Aug 1 FOMC meeting. Fed policymakers have been placing a considerable amount of emphasis on the state of the labor market. So, there is a chance that the FOMC could conceivably take further action at the next meeting if Friday’s report is disappointing – perhaps by shifting to outright QE by merely cancelling the sales of short-term Treasury securities that are used to sterilize asset purchases. However, given that this is a divided FOMC which appears to be resigned to the status quo, the bar to such action seems relatively high at this point.


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HoofHearted's picture

Any estimates on what the birth/death adjustment will be???

goldfish1's picture

No more unemployment benefits and guess what else?

"The House Agriculture Committee on Thursday unveiled its approach for a long-term farm and food bill that would reduce spending by $3.5 billion a year, almost half of that coming from cuts in the federal food stamp program."

flacon's picture

Another schizophrenic day tomorrow. Yes I don't. No I do. Up is down, north is south, and wrong is right and we're all living in a centrally planned twilight or dawn - never bright enough to make heads nor tales of the confusion - except that we know it's all lies but the market keeps on dancing even though he music has long since stopped. 

GetZeeGold's picture



I'm not even going to look................wake me up when the revisions come out.



Harbanger's picture

Good, because the "food stamp" program is rife with fraud, waste and abuse.  One way or another, you're going back to Govt cheese, Maggots.

Skateboarder's picture

Federal food subsidies, in any shape or form, involve the promotion of the GMO corn and soy industries. Fucking food-wreckers...

goldfish1's picture

   Monsanto owns the USDA. 

AU5K's picture

+200k or more, more leaving labor force, headline 7.9%.  Has to be below 8% for re-election.  Absolute must.  BLS will get it done.  Merry Ramadan, BHO.

goldfish1's picture

Also below 8% to cut off federal unemployment benefits?

Michael's picture

OT, I like Mish;

Record Number of Homes for Sale in Melbourne; Sub-Prime Collapse; "No End in Sight" for Arrears on Low-Doc Loans

According to ratings agency Standard & Poor's, 6.62 per cent of "prime" low-doc loans are more than 30 days in arrears.

That figure is double the level of two years ago and more than four times higher than prime loans.

Fitch Ratings has said it expects there is "no end in sight" for arrears rates on low-doc loans.

What "Can't" Happen, Is Happening

We have been told countless times that such scenarios could not happen in Australia. Well, clearly they could, because they are happening right now.

Moreover, this is just the tip of the debtberg. Expect conditions to get much worse.

Mike "Mish" Shedlock

warchopper's picture

Can we just table any discussio of Ramadan? It's hot out here in the Middle East, and I have to wear long sleeves, pants, etc. when it's 115' to 120'! 

Caviar Emptor's picture

Lately MSM have reported that consumers have gotten "frugal" :-)
Did they catch a virus? Are they all relatives of Coupon Suzy?
Or could it possibly be that buying power is cratering or some such high-order' calculus ? Hmm I guess I pick The Matrix

Mark Noonan's picture

I know I've become more frugal.  Heck, I even buy my shirts at Goodwill (you can often find shirts donated straight from the department store - original tags still on them, never been worn) and so spend $3.99 (or half that if its Wednesday) instead of $21.99.  Cheap?  Low class?  Yep.  But who wants to spend money these days?  I mean, for stuff?  I'll drop money like no tomorrow if its for family or to do something fun with other people, but to buy more badly made crap from China?  I don't think so...

Caviar Emptor's picture

Over last 10 years price of automobiles up 80-90%, restaurant meals 75%, gasoline 150%. Incomes? Flat nominal, down in real terms. That's the real story

akak's picture


According to Ben Bernanke and the B(S)LS, prices are up only 22% since 2000!  Isn't that great!  Inflation hardly exists! 

(What they don't tell you is that they are talking about prices on the planet Keynesia, where unicorns romp and shit skittles while flying over perpetual rainbows.  On earth, in the USA, overall prices and the cost of living are actually up 60-70% in that same period.)

Prometheus418's picture

Sadly. that depends on where you are on the scale, akak.  

I'd love to agree that overall prices and cost of living are up a mere 60-70% in that timeframe, but we're po' folk and know better.  I've had over a 100% increase in pay since 2000, and am far worse off than I was then.  There's a reason for that though- in 2000, I was 21 years old.  There was *never* a time when sacrifices didn't have to be made.  Since the day I left my parents' house, almost every goddam cent has gone to necessities.  I shitcanned the IT training I paid better than $40k for because the jobs went to India in the dot-com bust, paid off my student loans doing construction during daylight hours and steelwork at night, and still nothing ever got better.   Every promotion I ever busted my ass for came with a $1/hour raise- accompanied with a real fucking sincere apology and some mumbling about the state of the economy.  There was a little breather in 2008 when everything collapsed, and I was still collecting a paycheck, but that didn't last long, now did it?

Fast forward 12 years of two jobs and endless sleepless hours studying engineering, and my household is cashing in pocket change to buy milk for the kids when we used to be able to eat at a restaurant now and then and even *gasp* go to the theater to watch a movie on my paycheck.  I can't do it anymore.  We had to give up buying store-bought bread recently to keep the lights on, and are now making the shit by hand on the kitchen counter.  People whose salaries were set in better years think it's "quaint."  Hell, I even have silver- boxes of it that I bought with hour after endless, grueling hour of overtime, and it's all underwater now.  Since it apparently isn't "going to the moon," I'm going to end up taking a serious haircut on the garbage when it comes time to buy the kids shoes for school.  Is that what you expect to hear from an aerospace design engineer?  If not, get used to it- because it's the much-touted "new normal."

I'm not a 'murrican.  At least, not anymore.  Almost every inch of me is covered with scars, and I can push a fucking Mack truck up a hill because I was stupid enough to believe the lie that hard and patient work would pay off in the end.  Apparently, I'm dumber than a clod of dirt.  Too bad I make the planes that preserve the status quo- sure would be a shame if an idiot like me were to make a mistake when it counted, wouldn't it?

Fuck this shit, send the men with the black bags.  I'll go down shooting, and then it will be over.  Good luck with that, your society does not function without men like me.  You think those robots they are counting on design and program themselves?  You know what I do these days?  Drink, hoping to forget- even though it doesn't work, stockpile ammuntion even though I know it's hopeless, and try to think of reasons not to kill myself.

And no, I'm not going after you, akak- I see the sarcasm there, and assume you're as mad as me.  I'm just tired, pissed off and sick of all this. 

akak's picture

Prometheus, although my income would probably be shockingly low even to you, and I too know what it is like to be low on food, be late with the rent, and even (illegally, of course) drop my car insurance just to get by, my heart really goes out to you.  I felt that anything I said, though, would be an insufficient response to such an honest and disturbing outpouring of emotion as you have given us here.  Please, don't give up, at least for your kid's sake. 

Prometheus418's picture

I'm not going to give up, akak.  It's not "just venting", as I back every gripe with twice as much prepping, and I don't intend to go down without fighting like a cornered rat.  They, whoever "they" may be, have been expecting me to design their munitions for years- at the very least, I intend to use some of the accumulated knowledge to rub some elite noses in some shit before all is said and done.  It's like tilting at a windmill, but better that than looking my grandkids in the eye in twenty years, and trying to explain why I did nothing.  Hard not to be sour when your choices amount to slavery or death.

It may be disturbing, it certainly disturbs me... but we live in terrible times.  At 33, I'm the defacto patriarch of two families, because every older male has either died or abandoned their wives and children- and it's unspeakably horrible to be the one the other men in the family come to for advice because you are the only one with a job, when that job barely even keeps the lights on.  Less than six months ago, I had what I thought was a year's worth of food stored.  Turns out it was less than that when the kids started growing again- even with ever-less productive trips to the grocery store, those supplies are dwindling.  Three months from now, barring a real deflation at the gas pumps, the grocery stores and the utility bills, the only thing I'll have left is bullets and tools.  I don't take government handouts, and I don't use credit, so when things are gone, they're gone for real.  Can't ration the kids, or their brains and bodies won't develop properly, so there is no real choice.   

God willing, the tools will have some use, and the shells can stay in their cases.  If not, I hope to have a chance to shake your hand on the front lines before it's over.

Irish66's picture

All I can say is thank you for posting this.  It stopped me in my tracks and brought tears to my eyes.

Mark Noonan's picture

It won't help you and it probably doesn't mean anything, but if there's anything I can accomplish with the rest of my life it will be to ensure that the lion's share of life's rewards go to people like you.

God bless you and yours.

Kassandra's picture

I hear you loud and clear Prometheus418. Husband of 26 years with a MS in Chemistry+upgrades is working graveyard tonight at a fruit packing company...packing fruit. Me..accounting. But now do care-giving for very old people for very little money.

In our fifties and having lost much of our retirement, we're too tired to express our anger. We've decided we're going to survive this just to piss 'em off.

Mark Noonan's picture

My guesstimate is that our dollar has lost 99% of its value since, if you really want to know what you're earning, divide it by 100.  If you make $20 an hour, you're actually making 20 cents, or for an 8 hour day, $1.60.  Aren't we supposed to be horrified that workers were paid a dollar a day in 1912?  We sure are...and even though our wages have risen 60% since then, back in 1912 no worker paid any tax except a liquor tax if he was a bit of a boozer. 

They have consistently stolen our money to make sure the banks stay "solvent" while feeding us ever worse consumer goods to distract us (because organized sport and the fare on the idiot box are not quite enough).  They fear, though; once we become undistracted and start asking questions, the game is up.

MStickle's picture

... based on purchasing power, or what?  Hasn't the cost of many things gone down considerably?  And can't that hypothetical dollar buy lots of things that didn't even exist in 1912?  Would you REALLY trade places with a 1912-era worker? 

Mark Noonan's picture

Of things that didn't actually exist in 1912?  A computer and a television.  While the computer is useful the television is a bane on society.  So 50% of what we have now that we didn't have then is deletrious. 

That should also tell you something - think of the changes from 1812 to 1912 and then compare them from 1912 to 2012.  The Chinese are celebrating this year the performance of a feat in space which we did nearly 50 years ago.  They hope to land on the Moon in the next 10 to 20 years. 

We are stagnating...if the pace of change from 1812 to 1912 had been continued over the past century, we'd have millions of people living on Mars by now.  We aren't...and it is the growing and dead hand of Big Government allied with Big Corporation which is stunting our growth.

otto skorzeny's picture

I know -I'm done buying "stuff". stick with food and clothes the kids really need.

zorba THE GREEK's picture

Thank God for Mickey D putting on an all night crew or we'd be looking at a big deciine. Of course, this isn't

going to improve the GDP much, but who cares, as long as Obama is delivering those great jobs he promised.

Xibalba's picture

dismantling the military industrial complex, jobs, gays, immigrants, reining in Wall St. blah blah blah If monkeys could vote he'd be talking about zoo keepers.  oh wait. :0

Xibalba's picture

So +26k would be bullish...right?

ebworthen's picture

"Oh baby, look at that, this economy is on the mend!  Green shoots, mustard seeds!  This is your Grandfather's Buick!  America is fine, just like in 1965 and 1983 and 1996 and 2000!

There is no $16 TRILLION deficit, foreign nations are not planning to leave the Dollar hegemony, the Mahkets are functioning normally and there is no fraud or theft, and the populace is bubbling at the gills to work harder for the kleptoligarchy to fund more bailouts, banker bonuses, and tax increases; yeah!"

barliman's picture


June +85,000

July  +25,000

August  +25,000

September  - 40,000

October  -75,000

No QEEND until GERMexit


FMR Bankster's picture

Looks about right although June could be a little higher. The next few months will capture the fact that the healthcare bill (and taxes) are the real deal for small business. Up until now most small companies have just ignored it. Hell, I'd be suprised if anyone was hired the next 90 days as companies figure out how this will impact them. At $2000 an employee if you don't provide just the "right kind" of insurance there's a hell of a lot of incentive to sit on your hands.

SDShack's picture

If the NFP report is bad, how much you want to bet the reason given will be the "hot weather has inhibited hiring"?

El Oregonian's picture

The only jobs he cares about are his and holders...

genr8n's picture

Whats the big deal... if it's a bad report there's increased hopium for imminant QE3 (stocks rise), if it's a good report there's increased hopium that this time is different and USA has decoupled from the rest of the world (stocks rise).  Probably the worst result will come from a report that's exactly on consensus.

sablya's picture

It all quickly went from ideal to tragic...maybe the great demon, helicopter Ben, can cause water to fall from the sky.

francis_sawyer's picture

Just fucking plow the things over, put in a mound & backstop & maybe shoeless Joe Jackson will show up...

Uber Vandal's picture

Actually, '29 is in the rearview mirror, and we are approaching 1932-1934.

I am glad I listened to the stories my late grand parents and great grandparents told me of that time.

ebworthen's picture


Too few with a memory or a clue.

you enjoy myself's picture

QE crack addicts better pray its not >= 80K.   that removes any cover to launch more easing at the 8/1 meeting.  and there's no way in hell there's another QE at the Sep 13 meeting since its smack dab in the middle of both the campaign and the next debt ceiling fiasco - Ben is not going to provide the fuel for an "audit the fed" fire.

sweet, sweet schadenfreude if we get a print of over 100K which is obtained only because there's some preposterous 200K birth/death adjustment - the administration's desire to fudge the employment numbers will remove the only potential support for the SPX.


Hype Alert's picture

With the S&P within 4% of the high, it would take a disaster to satisfy the QE fix.  Big O needs a good number & the market needs a bad number.  Decisions decisions.

MillionDollarBogus_'s picture

this MDB is happy to be on a payroll.

Can't speak for the other MDB...

Rahm's picture

Bhahahahahahahaha mdb has a troll!

ekm's picture


Since when a number farted out out of the rectum is Important?

Amish Hacker's picture

The important thing that never gets MSM attention is the quality of the jobs, rather than some fanciful numbers from the BLS. Generally speaking, the new jobs pay less than the jobs that were lost, with fewer benefits and less room for advancement. It makes little sense to quibble about monthly statistics, when in the big picture we're all getting poorer.

q99x2's picture

Betcha no company hired their 50th employee last month.

zhandax's picture

You may be surprised; I haven't independently verified this, but my mechanic told me that in order to qualify as a 'small business', you must have 50 employees.  Less than that and you are classified as an 'entrepreneur'.  He is pissed because apparently entrepreneurs don't qualify for any of the small business incentives and credits the criminals passed.  I asked when the entrepreneur classification was created and I forgot his answer but I think it was since 2008.

sablya's picture

My excel spreadsheet predicts that the jobs number will come in at 45K.  The consensus is 90K and they've been consistently over-predicting for the past few months. Also, last June and July were 54K and 18K. So, this year since June was 69K, I predict 45K.  Some improvement over last year, but nothing spectacular.

ekm's picture

These idiotic numbers are just for cover.

The only thing that matters is money destruction in shadow banking. When the fed wants to replace the destructed money, they ask permission from the WH and Congress to fabricate a number.

JackT's picture

Feels like a setup. As soon as we let our guard down..BAM!