Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
This article is getting some media attention in the financial arena this morning, however it doesn’t seem to jive very well with data seen in weekly jobless claims (yesterday’s 348k was the lowest since early 2008) or the ISM reports. Apparently due to a figure in the Philly Fed survey, some analysis says that the February employment report will show only 50K-ish type of job growth. That obviously would be a relatively dramatic downside surprise. Again, don’t read too much into it but putting it out there as there is quite a bit of chatter about it.
- M.M. spoke with Harris Private Bank’s Jack Ablin who has been among the most accurate predictors of the monthly non-farm payrolls report, largely by following the Philly Fed’s employment index. The index, based on a survey of employers’ hiring plans, has been tightly correlated with the NFP numbers. And on Thursday the Philly employment index tanked from 11.6 to 1.1 … This suggests a February jobs gain of just 50,000, a huge drop from January’s 243,000.
- Ablin: “I’m not sure where economists’ estimates are yet for February jobs. But they were 100K short last month and now they may wind up overestimating the number. … What [the Philly Fed] is doing is asking respondents if they are going to add or get rid of jobs. “It looks like they are saying they are still adding, but very few. … And if you look at corporate income statements, they have cut pretty much everything they can cut, cost-wise. And they have a lot of operating leverage. … But if revenues don’t come through, they will just sit there. I won’t worry about one 50,000 jobs month too much … But I do hope the Philly Fed is wrong this time.
Here is a link graphing the relationship between the NFP data and Philly Fed employment index.
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