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Why Non-Farm Payrolls Will Be Weak
Following today's sizable miss and significant revision to the ADP data it is perhaps worth taking a step back and looking at some independent research on the adjustments and seasonality issues in forecasting jobs around this time of year and furthermore, why one of the pillars of this extended rally and US decoupling story (a substantially improving jobs market) could be made of salt. Bloomberg's consensus for Friday's NFP at +145k (from +200k prior) and a 30k standard deviation, there is plenty of uncertainty among the economic elite (with 125k to 150k the sweet spot for their guesses) and our favorite outlier Joe LaVorgna near the top at +210k. So while the trend is supposedly improving (though expectations are slightly off December's exuberance), Stone & McCarthy (SMRA) point out a disturbing trend of sizable forecasting errors for the January payroll print with 7 straight years of estimates overshooting by an average of 64k - strangely consistent post the BLS switch to a probability-based sample. But its not just forecasting error, TrimTabs takes a deep dive into the actual daily income tax deposits from all salaried employees (which are historically more accurate than BLS initial estimates) sees the US economy added only 45,000 jobs in January, nearly unchanged from the 38,000 in December. Noting similar forecasting errors as SMRA, TrimTabs points out that the decline in seasonal adjustment factors and the reality of the underlying tax data suggest "It appears that the economy has hit stall speed due to lackluster demand and a deleveraging consumer who would rather save than spend." as wage and salary growth (net of inflation) weakened further to -2.1% YoY in January from -0.5% YoY in December. "The weak job market has us concerned" seems like a truer reality than the establishment trying to keep the dream alive.
"The weak job growth in January has us concerned," says Madeline Schnapp, Director of Macroeconomic Research at TrimTabs. "It appears that the economy has hit stall speed due to lackluster demand and a deleveraging consumer who would rather save than spend."
"We see nothing on the horizon to knock the economy out of its slow growth mode," notes Schnapp. "The economy faces substantial headwinds from negative real wage and salary growth, high unemployment, waning government support, expiring tax incentives, contracting state and local governments, elevated fuel prices, and a sluggish housing market."
SMRA - Why Can't Forecasters Get It Right?
There are clear indications that labor market conditions are improving, including the general behavior of initial unemployment claims.
BUT we have notice a disturbing pattern of January payroll forecasting errors that we might want to reflect upon when thinking about next week's payroll release.
January payrolls have been weaker than the median estimate in each of the last 7 years. Ever since the BLS switched to a probability-based sample, forecasters have consistently overshoot on January payrolls. Is this because forecasters have not fully appreciated the impact of the large net subtraction stemming from the January birth/death adjustment? Or is this because the BLS has published the annual benchmark revisions since 2004 with the release of the January data, and these revisions add a degree of uncertainty to the change between December and January?
Can't tell. But 7 straight over-shooting may be more than a coincidence. There may be something inherent in the January data that forecasters simply don't understand.
During these 7 years the average overshoot was 64,000, the smallest was 35,000 in 2011, and the largest was 92,000 in 2008. These misses are not especially large, but the uniformity of the overshoot is odd.
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http://www.fxstreet.com/news/forex-news/article.aspx?storyid=589dc16c-9f...
DISAGREE!!!!
I am apprehensive about using data that has the following sentence in it,
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected Jan.17–25, and 92 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.
Everyone I talk to tells me things are great, business is great! then they say "listen, if your done with your questions I have to go, some guy is out in the parking lot trying to repo my truck"
OT:
American Airlines may cut between 10,000 and 15,000 jobs; plans to be announced this morning, sources say - @NBCDFWWhat's with that link, mkanterm, r u nuts? Who do you think you're talking to...?
I've been confused by something for a while now, and maybe someone here can explain it. How can we have monthly additions of, say, 150K NFP jobs, and weekly initial claims of 400K (rounding off) and yet the unemployment number goes down or doesn't move. I've been watching this for years. How is this possible?
ha ha..under which cup is the bean...grasshopper?
Because they lower the amount of people working...the denominatior gets smaller...we now have the same amount of working people as we did 20 years ago.....they claim people just quit looking for work...lol....but hey its an election year....so cheating is OK
"and a deleveraging consumer who would rather save than spend"
more like survive than die
get ready for ism levitation shorts get outta the way
va·por·ize
(va'pe-riz')
tr. & intr.v. va·por·ized, va·por·iz·ing, va·por·iz·esTo convert or be converted into vapor. Our new word of the month, Jus sayin'...
They are bold enough to lie and say +350k... Wouldn't be the first time.
The NFP is meaningless. I'd much rather see payroll tax receipts as a measure of employment.
but that would make Obama look very, very, bad. Also make him into a liar. We should also add the number of people new to welfare over the past year. But then we'd see negative job creation for Obama's whole term. Reality is a bitch never getting laid.
OT : These chickenshits should be drafted.
http://www.haaretz.com/news/middle-east/u-s-bipartisan-group-urges-uppin...
U.S. bipartisan group urges upping military threat against Iran Report by Bipartisan Policy Center (BPC) task force of Democrats, Republicans and independents says U.S. should deploy ships, step up covert activities and sharpen rhetoric.If you look at tax reciepts for all of 2011 the total amount of jobs added was somewhere around 200k. One person with three part time jobs doesn't count as three working people as much as the BLS would like it to. Also, that doesn't take into account people who got jobs, only to lose them again. The truest indicator of the job market is the labor participation rate, soon to drop to just above 100 million. It doesn't matter how many jobs are "created" if fewer people have jobs because there are less jobs available. It's such a giant facepalm. I don't know how people can not see that fact.
Really? You mean in a country where the majority of workers, in debt thanks to the "Credit and Student Loan Frenzy" of the "naughties" (1990s), aren't getting these things called, "Bonuses" or "Wages that keep with inflation" anymore. That, you know, people might start actually LOOKING at their bills and understand they need to SPEND LESS and PAY DOWN DEBT? You are really SHOCKED at this?
Unlike our Government and its Central Fail Bank, we can't just create money out of thin air, and pay 0.00000000001% interest. We actually are having OUR interest rates on our debt raised, OUR taxes raised. And yet it "appears" you see the working class not having any money? Is this bitch fucking stupid?
I feel like Rick Moranis' character, "Darth Helmet", in the movie, "Spaceballs":
"I'm surrounded by assholes"
http://www.youtube.com/watch?v=PNcDI_uBGUo
poor tyler still writing and acting qs if data and the market were related.
can anyone tell me shy WTI is getting killed and the markets are going up like crazy?