Today is the Employment Situation Report: The Bloomberg median estimate of economists is for a payroll gain of 184,000 workers in March.

As the chart below shows, it is the broadest range of guesses — a ~450k swing — since 2001. If the NFP data is anywhere near the high end of the range, it will be the biggest gain in three years — dating back to before the Recession began in December 2007.

There are a few caveats to the data: The weather might have been a factor. The snow storms of February (in theory) could have pushed hiring into March. The larger likely factor is Census hiring, which could distort the data for Qs 1 and 2 this year.

To reiterate our longstanding views on NFP: It is a terrible noisy, frequently revised datapoint. I believe it was Dennis Gartman who called the monthly NFP a “Random Number Generator.”Whats more important than specific print is the overall trend, which has been gradually improving over the past 10 months or so.

We can get beyond the randomness, as well as the lagging nature of the number, by looking at these elements:

1. Temporary Help: The least costly, fastest way to add to staff. No long term commitment, no HR costs, Retirement expenses, Benefits, etc.  This has been improving for the past 6 months, and historically has led employment recoveries.

2. Hours Worked: Remains near record lows. If firms begin adding hours, its usually in response to customer demand. This factor can lead a virtuous cycle of consumer spending, business capex, and more hiring — but it is still near record lows.

3. Wages: The ultimate arbiter of future economic activity. As long as firms have a greater supply of labor than there is demand, wages will stay fairly soft. Flat wages over the past decade could be reflecting a secular change. This does not bode well for future US standard of living gains.

Another consideration: As I mentioned on Bloomberg yesterday, we have been in the phase of the market where good news is good news. At a certain point in the cycle, good news becomes bad news (and bad news is good news) as it applies to the Fed.

Imagine a hot number: +500,000 jobs created. That might be bad news, as it suggests the Fed will remove the accommodation sooner rather than later. On the other hand, a soft number — anything negative to +50k — might imply that the Fed’s “extensive period of low rates” could continue further.

Employment Situation Summary and data will be released at 8:30 a.m. (EST)


Chart courtesy of Bianco Research

Category: Employment

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “March 2010 NFP Preview: Random Number Generator”

  1. Dennis says:


    Steve Liesman on CNBC just totally ripped you off — do they read the blog, then pretend its their own rresearch/commentary?

  2. I appreciate the update, as we don’t allow TVs in the office, and I miss this sort of stuff (I did hear it this morning, but I am not sure anyone stole anything).

    I had a funny experience with Steve (who I really like) a few years ago: We were at Leens Lodge up in Maine, for David Kotok’s Shadow Fed Committee. I did an extensive interview with him that was shortened to a brief interview.

    I watched the interview broadcast, and some of my best lines that did not make it into the interview were used by Liesman. I was livid, but did not say anything.

    Last month, I am at at dinner with a group of hedgies and analysts — all of whom are CNBC regulars. Steve’s name came up, and I told this story. THEY ALL COMPLAINED ABOUT THE EXACT SAME THING.

    What can you do. Imitation is the sincerest form of flattery.

  3. VennData says:

    He stole my line about pushing legislation to force all Americans to drive Trabants …to cut down on green house – and a whole host of – gases.

  4. [...] Barry Ritholtz pointed out about an hour ago: Another consideration: As I mentioned on Bloomberg yesterday, we have been in [...]

  5. BR,

    you’re too kind..

    Plagarism is the incipient sign of ‘Hackery’..

    “…Trudy Lieberman, the author of the CJR article, said journalists sometimes have a “circle-the-wagons” mentality when their colleagues break ethical rules. But she added, “Reporters didn’t think twice about holding Senator Joseph Biden to the highest standard of honesty when they had revealed that he had plagiarized material for a campaign speech, a story that helped drive him out of the 1988 presidential race.”

    As we noted, Lieberman’s article appeared back in 1995. But has anyone noticed that Senator Biden is running for president again, and that he is appearing regularly on the Sunday interview programs? The media seem reluctant to raise the issue of his plagiarism. As recounted by political scientist Larry Sabato, Biden had delivered, without attribution, passages from a speech by British Labor Party leader Neil Kinnock. Sabato reported that this led to revelations about a serious plagiarism incident involving Biden during his law school years, his exaggerations of his academic record, and the discovery that he had stolen quotations from other politicians in other speeches.

    This is a politician who justified the NATO bombing of Yugoslavia because of “genocide,” but nothing remotely approaching genocide was taking place there. It was a civil war that cost the lives of a couple thousand people. So Biden not only steals but lies. Perhaps Biden is staging the kind of comeback that has characterized the careers of media figures such as Totenberg and Barnicle.”

    Plagiarism Pays
    Media Monitor | By Reed Irvine and Cliff Kincaid | April 17, 2001

    at least, Liesman isn’t alone, so he’s got that going for him..

  6. [...] potential for stocks to react positively to the data. Big Picture blogger Barry Ritholtz believesthe market’s entering a phase where good news is perceived as bad news, and vice versa, [...]

  7. [...] this whole process far from perfect.  I wouldn’t go far as to call it a ‘Random Number Generator‘ but the uncertainties around data collection and estimation make it a noisy data series to [...]