NFP Preview: Bringing back the Under

A quick comment before dashing off — lots of good stuff queued up today, so get ready.

I no longer bother with the Over/Under bet we created so many years ago. The data from BLS has been too darn funky — noisy, subject to revision, overly massaged– to bother with that bet any longer.

But the spate of upgrades to the estimates is why I am tempted to take the under:

• The ADP data for the month of November has been consistently too bullish. Likely suspect: difficulty with the seasonal adjustment.

• The Household survey (which determines Unemployment) tends to lead the Establishment survey at the beginning and end of cycles.

• The WSJ’s Justin Lahart points out in this morning WSJ that Household survey gave a better depiction of the 2001 deterioration in jobs than Establishment:

"Now the household survey is flashing red again. For
October, it showed there were just 0.5% more workers than there were a
year ago, compared to 1.2% gain shown in the payroll figures. If the
household survey is giving the right read, the payroll figures are
overstated to the tune of one million jobs."

Consensus was for 85,000 jobs, but following ADP report, many economists raised their forecasts.

Note: The Household Survey and the Establishment Survey each measure two different, though overlapping, things (See Self-Employed Work-at-Home Contractors?).

However, if you adjust them so they count the same things, their differences mostly go away. For the wonkier amongst you, we addressed this way back in 2004’s BLS on Payroll vs. Household Survey.   


I am out of pocket for a few hours, but I will follow up later this morn. Please update the 8:30am  release and reaction in comments . . .


Survey to Trust: Is Household Poll The Real Deal?
Justin Lahart
WSJ, December 7, 2007; Page C1

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What's been said:

Discussions found on the web:
  1. Dale commented on Dec 7


    Nonfarm payroll employment continued to trend up in November (94,000), and
    the unemployment rate held at 4.7 percent, the Bureau of Labor Statistics of the
    U.S. Department of Labor reported today. Job growth continued in professional
    and technical services, health care, and food services. Employment continued to
    decline in manufacturing and also fell in several housing-related industries,
    including construction, credit intermediation, and real estate. Average hourly
    earnings rose by 8 cents over the month.

  2. jmf commented on Dec 7


    Birth Death adjustment once more higher than in 06

    51k vs 36k

    Have a nice weekend

  3. RichardN commented on Dec 7

    The release is obvious before it even comes out. The number will be exactly that which maximizes the likelihood of whatever it is the stock market needs to move higher. Currently that is interest rates, so even though according to ADP it should have been a great number, the market wants a 50bp cut so we can’t get anything above 100k. Awesome number!
    If in the future the dominant focus shifts to the weak dollar or recession fears then we’ll get huuuge employment.

  4. Josh commented on Dec 7

    Judging from the economic calendar on CNN Money (if anyone knows of a better calendar, please advise), average hourly earnings came in quite a bit above expectations (0.46% MOM versus an expected 0.30%). That doesn’t bode well for inflation expectations…

  5. 12th percentile commented on Dec 7


    Employers added fewer workers to U.S. payrolls in November, according to a closely-watched government reading on labor market strength released Friday that still came in a bit stronger than Wall Street expectations.

    The net gain in payrolls came in at 94,000 in November, after a revised 170,000 gain in October. Economists surveyed by had forecast a 70,000 in workers in the latest reading. The September reading was revised lower.

  6. Winston Munn commented on Dec 7

    Pravda…er, I mean, AP…headlined 94K as “Solid Job Growth”. I thought it took about 150-180K simply to break even.

  7. Dale commented on Dec 7

    During dot com it took 300K per month, after the crash it took 150-180K but now through the miracle of “increased productivity” it only takes 94K. In the future they’ll cheer if they only lose 100K a month…

  8. kharris commented on Dec 7

    The household survey showed 696k new jobs, and averages 303k over the past 3 months. So either the turn in the labor market that the household survey was supposed to be signalling is over, or the household survey isn’t signalling a slowdown. It’s just noisy and unreliable. Weather subtracted 19k few jobs than normal for the month. So if you like “ex” measures (and I know you do), payroll hiring ex-weather was 75k, just about exactly what was expected.

    The surveys were moved forward a week due to the Thanksgiving holiday, which probably makes seasonal adjustment problematic.

    Private sector hiring diffusion fell below the 50 mark, which cannot be a good sign.

  9. Eric Davis commented on Dec 7

    Yippee Retail jobs, anyone interested in stocking shelves can have a job… Whooo Hooo!!!

    No mater what, the shorts have to step out of the way of the Fed. It’s like a dividend date for the market.

    Cause you know Ben isn’t manly enough or smart enough to step up to the plate and do what he needs to do…..

    (he may be smarter than we think, maybe the generations of Xbox playing, T.V. Watchers, arn’t good for anything, besides being stinking sedentary meat bags.)

    Stupidly, the bulls don’t realize that the market isn’t going anywhere till we work off the fat in this shitty economy; of fudrucker jobs, and shelve stockers.

    Let the Economy malinger on.

    and for a few days, I’ll have flights of fancy that the Fed will “Nut Up”, and do what they need to do.

    But, i’m actually psyched to watch the market pummel the crap out of everyone.

  10. Bob A commented on Dec 7

    Barry Ritholtz on Wallstrip today folks.
    Check it out.

  11. justin commented on Dec 7

    Frankly, I’m surprised at how “wrong” (far off), these Wall Street Economist can be. Or is somebody sucking somebody’s (?) just to slight the direction, if only by alittle? Wish I would have been privey to all this when I wore a younger man’s clothes, I just maybe would have become a Wall Street Economist. Where else can you keep a job when being so wrong?

  12. kharris commented on Dec 7

    Um, Justin…

    Given the prior reported level of payroll employment and the median estimate, expectations were for payroll employment in November of 138,499,000. Instead, we got 138,467,000. So the median estimate was wrong by 0.02%. Try predicting the outdoor temperature 5 minutes hence, anytime you want, and see if you can get that close. Of course, you won’t have to worry about BLs revising the prior temperature reading to make your forecasting job harder.

  13. GrandQuibbler commented on Dec 7

    You use the phrase “out of pocket” apparently to mean something like “out of contact” or “out of the office.”

    You’re only the second person I’ve heard use the phrase that way. I’ve always taken it to mean “I spent some money and I haven’t been reimbursed yet.”

    Where did you pick up your usage of the phrase in your sense? Quibbling minds wanna know.

Read this next.

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