The Friday NFP Preview: 1, 2, 4, or 500,000? Perhaps 250,000+
May 6, 2010 10:45 am
The official number estimated by economists surveyed by Bloomberg is 189,000 for the April NFP report. But, the question is: Will we see a much bigger surprise packed with all sorts of good commentary stating the economy is about to blast off into a ferocious growth cycle?
What is now occurring is a confluence of factors that may show that the “official” unemployment rate close to 9.7% and the NFP payrolls rising by as much as 250,000 – 300,000 for April. Much of this will be a chunk of temporary employees that are being added by the Census Bureau. We know that the Census Bureau will be creating a short-term hiring spurt between now and August. After that time there will be a abrupt end. The total number of temporary hires will amount to approximate 1,000,000, according to reports, of which there may be 500,000 or more still to be added.
The biggest boom in hiring will come in the months from now through August in the door-to-door phase.
In addition, there is a rather high correlation between the growth or loss of jobs with the ADP payroll and the BLS payroll reports. If we look at the hangover due to weather related items from February and March and the pickup in manufacturing, it is easy to see why there are estimates as high as 300,000 for the Friday print.
It is even more likely that we will see an even higher level than estimated as our own best leak source, Joseph “Blabbermouth” Biden, VP suggested that:
“All in all we’re going to be creating somewhere between 100[,000] and 200,000 jobs next month, I predict,” Biden said, according to a pool report, adding that he “got in trouble” for a job growth prediction last month. “Even some in the White House said, ‘Hey, don’t get ahead of yourself.’ Well, I’m here to tell you, some time in the next couple of months, we’re going to be creating between 250,000 jobs a month and 500,000 jobs a month.”
Out of the 82 economists surveyed, coming in at the top end is PNC Bank’s, Stuart Hoffman at 300k, and at the low end is Mizuho Securities’, Steven Ricchiuto at 75k.
Other Notable estimates:
- JP Morgan = 145k; 5/3/2010
- Goldman Sachs = 175k; 5/3/2010
- Deutsche Bank = 225k; 4/16/2010
- Barclays = 200k; 4/30/2010
Traditionally, Goldman will change their call within 24 hours or so before the release, so keep a watch out to see what they are thinking. For whatever reason, they have been right on over the past few months, especially with their last-minute revisions.
If we do see a print that is way over estimates, the knee-jerk reaction will probably be to first push up equities (futures), but then we may see a slight pullback on the thought that there will be a Fed rate increase…sooner than later. But, with all of the turmoil in Euro-land, that would appear to be a bad play by the U.S. as the dollar would become “too-strong” for exports. Also, there is still underlying weakness in the economy (the Fed calls slack) and that will require a loose monetary policy as we have been reminded, time and time again by Mr. Bernanke.
Finally, depending on how many government employees were actually added on this report will determine just how much hiring is actually going on in the private sector and whether or not businesses confidence is up.
If we see that there were actually more than 200,000 government workers put on, with a total of 300,000 hires or less, then we know that hiring is still slow. Keep in mind that most economist’s estimates should include the Census workers.