Today is likely to be a very unusual Non Farm Payroll report. The reason why lay in the combination of several unusual factors, combined with the ongoing economic recovery from the worst recession in decades.

The median forecast of economists surveyed by Bloomberg News is for 536,000. That number would be the most since 1983. As we discuss below,  we could see an even higher number.

Before we take a closer look at the details, a caveat: Regular readers know I don’t think much of the monthly NFP data. Identifying the precise monthly changes in a 143 million person labor pool is essentially an exercise in futility: Too much noise relative to signal gets run through a subjectively flawed model, subject to large, revisions to correct the consistent tracking error. What comes out of this sausage factory is little more than a rounding error.

This does not mean, however, that NFP is worthless. We care about two factors: 1) The overall trend, and 2) internal Employment Situation components such as Hours Worked, Temp Help, and Wages.

Which leads us to today. Consider the following elements which could go into an upside surprise:

• ADP Private payroll report was 55,000. But ADP has consistently been understating the BLS data, by 100-150k per month. (They keep revising their numbers upwards). That implies a private payroll number of 150-200k.

• The Labor Department showed ~417,000 more census workers were hired during the employment survey week (5/12) versus April.

• The Monster Employment Index year-over-year growth rate climbed for the fourth consecutive month in May — and is now 14% (16 points) above the May 2009 index of 118. (See chart below). The index showed rising demand in 12 of the 20 industries, and 15 of 28 metro areas tracked by Monster showed greater online jobs demand.

Birth Death adjustments for the month of May have tended to be fairly generous, typically coming in at 200k or better. (B/D goes into the total employment pool, not the monthly change in NFP)

Other factors: New claims for unemployment insurance fell for the second straight week; Factories, Autos and Retailers have been showing ongoing strength in recent months. They will also be contributing to a positive number. Last, the President and VP have been publicly discussing the data — so you have to assume they got an early look, and liked what they saw.

We don’t make regular NFP forecasts, because the data is so subject to revisions, making the guessing process an exercise in futility. But given the unusual circumstances, I wanted to point out what might be an upside surprise.

Crunch the numbers of all of the above, and I calculate we could actually see a NFP number of 650-750k.

BLS release at 8:30am

One final note: BLS is hosting a webchat today for those folks who want more info on the methodology.


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.

64 Responses to “NFP Forecast: ~700k”

  1. JustinTheSkeptic says:

    Any idea why Manpower (MAN) has taken such a dive lately?

  2. Dennis the menace says:

    Dude, Steve Liesman just totally ripped you off.

    He practically read this post, and gave you no credit

  3. Hmmmm, I took him off of my CC list sometime ago, and this month, and accidentally sent this to him. Funny coincidence, no?

    But anyone doing the research would have to use these factors.

  4. beatstreet says:

    I notice that the FF futures contracts are selling off despite a nice drop in equity futures overnight. This is unusual as folks usually flock to short term rates when equities go down.

    The market is clearly expecting a BIG number. I will sit on my hands and hope for this, with the plan to pick up a nice slug of FF futures if they sell off following the number.

    Its 5 months to the election – conspiracy theories or not, I wouldn’t expect a lot of real weak economic numbers out of Washington for awhile. They are going to try and keep this thing together w/bailing wire until Novermber. Didn’t work in 2008, we’ll see if they have better luck this year.

  5. Bernie X says:

    EUR/USD just dropped 150 points, breaking through support and setting a new low, starting 90 minutes BEFORE NFP.

    Either there are a lot of jittery traders out there, or there is still a lot bearish sentiment getting in before the report.

  6. Mike in Nola says:

    ZH reached a similar conclusion, though in a simpler fashion: 400k census this month + 98k census from last month + 200k BD adjustment. Since these numbers are all really figments of some bureaucrats formulas, it could be even higher if there is a little real growth.

    I’m hoping for it so I can buy some long dated puts which have gotten too expensive lately. As someone bear blog commented yesterday, it seems the markets are pricing in too much bad stuff too soon. Ben ain’t out of ink yet.

  7. Mike in Nola says:

    Bernie: could be speculation about SocGen:

  8. Mike in Nola says:

    Or maybe the Euro is reflecting news from Hungary:

  9. beatstreet says:

    Or maybe there is no way out for Europe except for massive devaluation. :)

  10. dead hobo says:

    Yup, blow out, as defined by BP.

  11. Doh!

    431k — a huge miss, and while disappointing, it adds to the length of time the Fed can stay on the sidelines

  12. Mike in Nola says:

    Damn, looks disappointing. No new entry point.

  13. johnborchers says:

    These are almost all census jobs. ADP jobs of about 55K is probably a little short but close to the 50-75K I figure were actually created. But even those are mostly low paying.

  14. Kort says:



    Total nonfarm payroll employment grew by 431,000 in May, reflecting
    the hiring of 411,000 temporary employees to work on Census 2010, the
    U.S. Bureau of Labor Statistics reported today. Private-sector em-
    ployment changed little (+41,000). Manufacturing, temporary help ser-
    vices, and mining added jobs, while construction employment declined.
    The unemployment rate edged down to 9.7 percent

  15. beatstreet says:

    Bummer. No chance to buy a thing.

  16. Transor Z says:

    Discouraged workers up 291k YoY. CLF participation rate down .2.

    The innards of this report are definitely not great.

  17. B/D was a generous +215k – – with big adds in Leisure/hospitality and construction….

  18. Patrick Neid says:

    so much for Obama’s inside info tip!

  19. dead hobo says:

    CNBC says BD = 215,000.

    Does this mean census jobs + BD = negative growth, or just a statistical factoid?

  20. dead hobo says:

    Mike in Nola Says:
    June 4th, 2010 at 8:32 am

    Damn, looks disappointing. No new entry point.

    Stop thinking small. If we’re lucky, the long rumored S&P 850 is coming.

  21. rktbrkr says:

    Only 41K private sector jobs, everything else is noise

    now come large scale gov layoffs census, teachers, prison guards, cops…because the last hired are the first fired they’ll have to layoff more rookies to get to the required savings level

    Huhgary is going Greek too

  22. Expat says:

    Awesome NFP numbers! Looking forward to a massive rally on the back of this news.

    Oh, let me explain…GS sold the NFP short for $82 trillion this week, so the banking sector will pull the down up by five or six hundred points.

  23. Transor Z says:

    Maybe they’ll hire another 300k in June to stand around Gulf beaches in white suits with shovels, rakes, and hefty bags.

  24. JustinTheSkeptic says:

    “It’s the economy stupid!” I remember those words from somewhere? lol

  25. lalaland says:

    Wow – didn’t see that one coming. Count me among the disappointed optimists…

  26. thumbcharts says:

    The May employment charts have been updated with the latest data. Even though the monthly numbers don’t look good, it is clear that the 3-month moving average is continuing to improve as seen on this chart:

    However, the median duration of unemployment continues to rise (although the YOY % change is turning the corner):

  27. So today ends below 10,000? And if so, does that mean we get to see Maria Bartiromo squeal in horror?

  28. bsneath says:

    Employers shifted part time workers to full time. 550,000 fewer part time workers in May. Supporting this is the 0.7% increase (8.4% annualized) in average weekly pay. During the recession companies shifted workers to part time and now they are shifting them back to full time before going through the expense of new hires. My conclusion is the report is actually somewhat better than the headline numbers.


    BR: I do not disagree with your logic — but i get different data from BLS:

    BLS: “The number of persons employed part time for economic reasons (some-times referred to as involuntary part-time workers) declined by

    Where did you get the 550k from ?

    BLS: Average hourly earnings of all employees in the private nonfarm sector increased by 7 cents, or 0.3 percent.

    Thats 7 cents, not .07% or 3.6% annually

  29. wiseguy says:

    Politics, you got a love it. Remeber couple a days ago in a middle of our great recovery, Obama wanted 200 bil for job creation stimulus. If it was all nice and dandy – why would you need it? That action told us what the numbers will be…

  30. rktbrkr says:

    Tranzor Z…joking aside I think there will be massive temp gov hiring along the Gulf coast, they will probably use 3rd parties to do cleanup reimbursed by US with BPbucks

  31. rktbrkr says:

    So today ends below 10,000? And if so, does that mean we get to see Maria Bartiromo squeal in horror?


    It could be a depends day for Maria

  32. Mike in Nola says:

    dead hobo: But I’m not very short! was lookin into it two weeks ago – when things crashed. About all I have now is treasuries (not bad lately) and some Hussman Funds.

  33. call me ahab says:

    “431k — a huge miss, and while disappointing, it adds to the length of time the Fed can stay on the sidelines”

    stay on the sidelines- are you kidding me BR- Bernanke thinks he’s the QB calling the plays from scrimmage-

    only to get sacked time and time again

  34. Mike in Nola says:

    Rosie’s going to be on Bloomberg Radio later to gloat. Think they said 11am – guess that’s ET.

  35. franklin411 says:

    Agreed, bsneath. Businesses apparently watched too much CNBC and read too many permabear comments on TBP, and they got scared that Europe would lead to a Double Dip. They wanted to cut workers, but one big problem…

    Demand remained too strong to cut workers. They needed help just meeting surging demand today. So what did they do? They gave existing workers more hours, which has to happen before hiring begins in earnest regardless.

    Meanwhile, consumers continued buying at a record pace, auto sales are skyrocketing, home sales are doing the same, manufacturing and service sector indicies show strong growth, air passenger traffic and volumes are at multiyear highs, and the recovery continues apace.3

    Where’s the big European contagion dip down, bears?

  36. Mike in Nola says:

    F411: you’re lookin’ at it.

  37. franklin411 says:

    So the price of a strong recovery is a second dip…of +411k jobs? I think I can handle the torture… Ha!

  38. call me ahab says:


    dude- your a dork- admit it-

    it’s all green shoots for you you as long as your man is in the WH-

    did you also believe in the joke that was the “Bush Boom”?

    the truth shall set you free- Jesus

  39. call me ahab says:

    and speaking of dorks-

    my comment should read “you’re a dork”

  40. Mike in Nola says:

    f411: If you count census hiring as a recovery. If you pull out the BD adjustment, you have a net loss in the private sector.

    BTW, who who knows anything is talking a strong recovery. We’re looking at years of slow growth.

  41. rktbrkr says:

    Time to start guesstimating what the gulf coast spill related job losses will do to LA,MS,AL,FL & TX, already having a secondary impact on tourism.Fishing, tourism and construction all in the tank, only military keeping people working there

  42. franklin411 says:

    Mike and Ahab,
    Are you guys sharing a keyboard? What’s with the double double word words? Ha!

    The fact is that all the data is on my side and has been for a year. None of the recent data sustains a bearish point of view. None.

  43. The Curmudgeon says:

    Predictions are hard, especially about the future.

    Spin, Spin, Spin. Yet, none of it means a thing. It’s mostly, as BR noted before filing his prediction at what the noise would be, just noise.

    My garden is full of green shoots. I don’t figure any of ‘em will grow to the sky.

  44. Mike in Nola says:

    Give up Ahab, it’s like arguing with W.

    rktbrkr: Article in the Chron this morning about the “nascent” recovery in jobs being squashed. Yesterday article about Cheney’s company reassigning it’s workers because of the halt in deep water drilling. I imagine the other oil services companies are doing the same.

  45. The Curmudgeon says:

    @f411: Why not, instead of sustaining a bearish or bullish point of view, you allow your data to just be what it is? Does your value system require for its edification that you correctly predict the future?

  46. rootless_cosmopolitan says:


    Will you be here later this year when GDP growth will stall to Zero or go into recession territory again? Or will you never been seen again, then?

    auto sales are skyrocketing, home sales are doing the same

    You are delusional, or you are spreading propaganda knowing what you say isn’t true. Which one is it, huh?

    Auto sales and home sales have been up recently, but they haven’t been sky rocketing. The recent home sale numbers are useless to draw any conclusions about the economy, anyway, because they have been distorted due to the tax credit for home buyers. Home sales will collapse again with the tax credit just having expired in April. New mortgage applications have shown this collapse already.

    In contrast to your claims, consumer demand generally has been contracting for a while already:

    And it’s still getting worse, although the current contraction isn’t as steep as the previous one. The supply side of the economy will react to this eventually. But there is a time delay between demand contraction and supply side contraction.

  47. batmando says:

    “Meanwhile, consumers continued buying at a record pace, auto sales are skyrocketing, home sales are doing the same, manufacturing and service sector indicies show strong growth, air passenger traffic and volumes are at multiyear highs, and the recovery continues apace.”
    compared to what? in what timeline?
    mish puts the “checkmark recovery” in perspective, e.g., with auto sales at all of 1980s levels? give us a break.

  48. franklin411 says:

    That’s exactly what I’m doing. Consumer confidence never missed a beat, despite the flash and Euro crashes. Retail sales were fair, manufacturing index was unchanged, services the same. American Airlines reported higher passenger loads and increasing travel demand. Housing came in fair, auto sales skyrocketed (and there’s no tax credit inflating that demand). Employment is growing, hours worked growing.

    In return, all the bears have are scary stories, not real data. They have a bunch of “what ifs?” “What if Europe falls into civil war?” “What if China invades Greece?” “What if Americans boycott the dollar?” “What if consumers stop doing what they have never done in 100 yrs–stop buying stuff they don’t need?”

    What if, what if, what if–I’m tired of bearish fairy tales. There is no data to sustain the bearish point of view.

  49. bsneath says:

    (this comment ought to go over well)

    Possibly one reason why hours worked is higher while new hires not so much is because some employers cannot find qualified applicants (they are still on their unemployment benefit vacations).

    I doubt it is a material number, just want to keep my “asshat” status in force…..

  50. Captain Jack says:

    “There is no data to sustain the bearish point of view.”

    Tell you what friendo — global macro and inflection point risks aside, which you seem to be 100% discounting a la Ken “Greece is trivial” Fisher, howzabout this deal:

    I’ll take the price action, and you can have everything else…

  51. Adult Franklin411 says:

    When I was younger I didn’t see the inconsistency in holding myself out to be an intellectual academic/ history scholar on the one hand and pigeonholing economic outlooks into the rather silly and simplistic bear/bull binary model on the other.

    But that was when I was younger and a total moron.

  52. rootless_cosmopolitan says:


    The fact is that all the data is on my side and has been for a year.

    No, they aren’t and, regarding your second statement, they have only to a certain degree being consistent with an unprecedented stimulus by governments all over the word, the effect of which will fade with the fading stimulus, like I have been saying it for a year now.

    None of the recent data sustains a bearish point of view. None.

    That’s not correct. On the contrary, they do. Particularly those data that are an early indicator where the economy is heading, i.e., home sales and consumer demand.

  53. The Curmudgeon says:


    I don’t deny that there is data supporting your view, nor do I deny that there is data supporting the opposing view. That’s not my point. My point is that even an objective view of the data could yield disparate interpretations of what it means going forward. Neither camp, bears or bulls, should become too emotionally attached to their analysis, else they’ll filter all forthcoming data through a lens to which they are emotionally bound, and their analysis will suffer.

  54. Mannwich says:

    I do give f411 credit for coming out to face the bears today, however worthless and delusional his comments may be. Where’s cognos these days? His pretend Hedge fund blow up?

  55. Cdale_dog says:

    Mannwich, no way cognos shows his face around here today. He is probably still licking his wounds. I have kept saying that SDS is your friend in this market. I also loaded up on TWM as the Russell is due for some additional correcting. I have to admit a retest of the March ’09 lows would be awesome, but I would probably be a buyer once the DOW breaks below 9,000. I would probably buy some more at under 8,000 as well. I just don’t see a retest as long as BHO is in the white house. Now, if they get a Tea Partier in in 2012, the market might go to ZERO.

  56. Mannwich says:

    Agreed all around, Cdale, which is why it’s a waste of time to take the cognos troll types seriously. They’re front runners. Only around when they are “right”. Nowhere to be found when they are wrong.

  57. Mannwich says:

    Maybe the new jobs plan is to have half of us count each other and the other half trade stocks with each other? If this were a true and real “recovery”, wouldn’t the private new jobs numbers be getting much more robust by now? Just saying. I’m open to anyone refuting this.

  58. dead hobo says:

    Mannwich Says:
    June 4th, 2010 at 11:02 am

    I do give f411 credit for coming out to face the bears today, however worthless and delusional his comments may be. Where’s cognos these days? His pretend Hedge fund blow up?

    I doubt his Hedge Fund is pretend. Only you and I and most others might describe his “hedge Fund” as a compost pile.

  59. The Curmudgeon says:

    “Now, if they get a Tea Partier in in 2012, the market might go to ZERO.”

    Hmm. Interesting observation. I think if Obama isn’t re-elected, there’ll be plenty of turmoil, no matter whether its a tea partier or just a vanilla-flavored republicrat/demopublican. Markets love the devil they know.

  60. Mannwich says:

    @hobo: Oh, I doubt it too, whichi s why he’s not here these days. His fund probably blew up in recent weeks. Ah, the hubris in gambling.

  61. ashpelham2 says:

    I’ll tell you one way to make retail sales go up, ACROSS THE BOARD: Tell your employer to stop blocking all the damn shopping sites from your notebook. I can’t even look at some MLB stats I was looking for because there are links on MLB to shopping areas. I know I can get the data elsewhere, I just like the layout at home of

    There’s my contribution to the stimulous and recovery. Turn down the limiters on web filtering softwares!

  62. theobannion says:

    “Bailouts rewarded the worst managements, the least deserving shareholders, and the most reckless creditors. (That’s not how capitalism is supposed to work).”

    How a system works in the real world can be predicted by analyzing the rewards and punishments built into the system. Preachers who exhort capitalists to “do the right thing” are shouting into the wind; similarly, teaching courses in business ethics is a waste of time, and for the same reason. Capitalism has its own ethos. Its sole mandate is to make money – beat down costs and charge what the traffic will bear. What? – the AIDs patient (cancer patient – fill in your costly disease of choice) can’t afford 20 or 30 thousand dollars a year? Not relevant. What? – it’s immoral to take huge risks, pocket the rewards and pass the losses onto the taxpayer? Not relevant – it’s good business: it makes money. What? – corporations get fined for “doing bad things”? Not relevant, because management has seen to it that, from the beginning, corporations should be seen as “persons” and the corporate person shall be held liable for “its” actions, and those who command the gag-an-elephant salaries and the sink-the-Queen-Mary bonuses shall forever be held safe. Capitalism without regulation is a nightmare turned loose in paradise. People, pursuing their “enlightened self-interest,” the only philosophical precept underlying Adam Smith’s pin factory, will certainly use their fortunes to influence government – it’s in their self-interest. They will hire lobbyists, will campaign for supreme court and appelate court justices for the same reason. And as a moral precept, pursuing one’s “enlightened self-interest,” is meaningless. Serial killers pursue their enlightened self-interest, as do the Bush family, Blue Beard the Pirate, and yourself, myself, and our readers. The “enlightened” part is always the rub: It’s the self that determines what is or is not enlightened.”

    As usual, Barry, you’re on the money; but capitalism and systems in general are like robots. What they do is all in the programming. Don’t expect morality from this particular robot. It just isn’t in its memory banks.


  63. [...] census workers, and that was skewing the numbers. We even said you could see a crazy number, as high as ~700k, and you should ignore [...]