Today will be quite the interesting Non-Farm Payrolls report. Consensus is for 127,000 new jobs, with a range of 60,000 to 160,000.

Why "interesting?"

Well, first, there is a general economic gloominess amongst the populace, as reported in yesterday’s WSJ/NBC poll. There is "broad public pessimism," and while  at least some of it is related to Iraq, that hardly explains the deep and broad negativity. (I disagree with NRO’s Jerry Bowers, who claims its a market sentiment buying signal). Two thirds of Americans beleive we are in a recession right now, or will be within a year. It is simply hard to imagine robust job creation occurring with that sort of widespread sentiment. 

Second, there was the rather sour ADP Report (chart). A month-over-month gain of 48,000 new private sector jobs is fairly punk. Unless the government itself created 100k new jobs — suspect tho that might be — we are set up for a disappointment. 

Lastly, there is the Birth/Death factor. January and July are the two months of the year where BLS puts this hypothetical job creation machine into stasis for a month due to seasonal factors. We typical see a negative or flat B/D number in January and July.

Why does this matter? As we noted in The Accelerating BLS Birth/Death Adjustment, this adjustment has been an increasingly large proportion of BLS reported NFP.  In 2006, it was responsible for a large minority of BLS reported new jobs. In 2007, the B/D adjustment is responsible for more than half of all new reported jobs!   

The report is out in ten minutes . . .

UPDATE August 3, 2007 8:58am

Nonfarm payrolls increased 92,000 in July (down
from 126k in June). The unemployment rate rose 0.1 percentage point to 4.6%. Prior months were revised down by 8k. Monthly job growth has averaged 136,000 so far this
year. Employment is now growing at a slower rate than population growth. 

The birth/death model added just 26k, way below recent averages.

The WSJ reported that "Stocks may slide
early Friday after a weaker-than-expected July employment report,
raising fears that troubles in the housing market may be spreading."


America’s Economic Mood: Gloomy
WSJ, August 2, 2007; Page A4

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