Seasonal Adjustments: Big Swing Factor?
While Knight's algos will be focusing on the headline number and furiously calculating if [X AS PRINTED] is < or > than [X AS EXPECTED] and simplistically moving the market up or down accordingly, without regard for quality or composition (they don't call it the Part-Time Non Farm Payrolls for nothing), another key swing factor in July will be the seasonal adjustment. As a reminder, as the chart below shows, in July we experience a major swing event. While in June, seasonal factors typically subtract about 1 million from the headline non-seasonally adjusted headline number, in June we invert, and instead of subtracting, seasonal factors for the first time since April "add" jobs. 295,000 (past decade average) to be exact. How will this impact the actual number? We will find out shortly. One thing to note: of the 100,000 consensus headline adjusted print, the seasonal adjustment factor itself will be roughly three times the actual print that will move the market. In a year of record temperature abnormalities and the "average seasonal adjustment" being anything but, we leave it up to readers to do with this data as they see fit.