Today we get the Non Farm Payroll data for March. Expectations are for 205,000 net new jobs, with Unemployment ticking down slightly. Unemployment benefits have dropped to the lowest level in four years, although long term unemployment remains a stubborn problem. And one of the drags on NFP data — government layoffs — may have run their course for now.

The key question for the report: Seasonal weather factors. Exactly how many jobs did the unusually warm weather in January and February pull forward from March (and April). The sectors likely to be influenced are construction, auto sales, transportation, and even retail shops like Home Depot and Lowes. I have heard some people suggest even hospitality and food service gained from the record high temperatures.

As an investor, I am keying in on two factors: What Does this mean for the possibility of Recession? And how does the Federal Reserve react to better or worse numbers?

While most of the Street has already moved past a possibility of any economic contraction, a few laggards (notably, ECRI and John Hussman) still are maintaining their recession vigils. A fourth month of 200k+ job creation makes those positions much less tenable; however, a major disappointment puts the economic bear back in play.

As far as the Fed is concerned, too good a number puts the probability of QE3 into further doubt. That is significant, as monetary stimulus have been a major catalyst to equity price rises. A strong number raises the bar for more stimulus. If that were to happen, equities are going to have be priced based on their earnings and growth prospects.

Imagine that . . .

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Jobs News Could Be So Good That It’s Bad

Source: WSJ

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See also:
Jobs News Could Be So Good That It’s Bad (WSJ)

Jobless benefits claims drop to lowest levels since 2008 (WaPo)

Payrolls in U.S. Probably Expanded by 205,000 Last Month (Bloomberg)

Category: Data Analysis, 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.

13 Responses to “Good Friday NFP Day”

  1. mark says:

    Lakshman’s media calendar will certainly be full next week. Too early for a victory lap though.

  2. swag says:

    Where is your usual disparagement of this series?

  3. DrungoHazewood says:

    Mark,

    If the market continues to react badly, it could turn into a frenzy.

  4. Iamthe50percent says:

    Massive government lay-offs continue, as the US Postal Service prepares to close half their facilities next month, excessing nearly half of their employees. Union contracts contain a no-layoff clause, but the USPS evades this by offering jobs hundreds of miles away knowing employees can’t sell their houses. For the stubborn few who take the offers, they often face another out of state move after six months at the new location. Meanwhile, the House Government Affairs Committee proceeds with legislation unilateraling voiding the Union contracts ala Wisconsin.

    No, government fueled unemployment isn’t over yet.

  5. DrungoHazewood says:

    We may need some Q3 crack.

  6. Chief Tomahawk says:

    Observation: It’s been awhile since I’ve watched CNBC… but I noticed the absence of the gold price this morning… not seen in the top scroll bar or in the one-item window down below. Is it a one day phoenomenon because the market is closed, or CNBC trying to de-emphasize gold talk?

  7. mark says:

    @drungo

    Talking about the reality of recession not necessarily market reaction. Is the stock market still a leading indicator? In light of market behavior over the last decade that notion may need a rethink.

  8. CSF says:

    120K new jobs in March… the main issue isn’t recession but whether QE3 will soon be back on the table.

  9. RW says:

    Not a good jobs report. It’s foolish to react to one month up or down and it seems clear most of the poor news is a result of continuing government downsizing, but I’m becoming increasingly persuaded we are not going to be able to successfully improve the employment picture, deleverage and grow because, for lack of a better bumper sticker, there is simply not enough inflation.*

    *the price of gas, food or other commodities are shocks that distract attention from the core problem which is a wage depression and an employment picture that is beginning to take on structural properties; i.e., there is a serious risk it could become permanent.

  10. Concerned Neighbour says:

    Ben Bernanke has already killed price discovery. Now he’s going to stab it a few more times, just to be sure.

  11. willid3 says:

    isn’t the market closed today?

  12. Futuredome says:

    Gotta disagree RW, this was a very solid report. The poor Hedonics used by the BLS was the problem and will have to be “fixed” in coming revisions.

  13. [...] Friday’s punk NFP, the near term movement is [...]