From Calculated Risk, here is an excerpt from his monthly assessment of the BLS report:
• The ADP employment report showed an increase of 139,000 private sector payroll jobs in February. This was below expectations of 158,000 private sector payroll jobs added. The ADP report hasn’t been very useful in predicting the BLS report for any one month. But in general, this suggests employment growth below expectations.
• The ISM manufacturing employment index was unchanged in February at 52.3%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll jobs decreased about 7,000 in February. The ADP report indicated a 1,000 increase for manufacturing jobs in February.
The ISM non-manufacturing employment index decreased in February to 47.5% from 56.4% in January. A historical correlation between the ISM non-manufacturing index and the BLS employment report for non-manufacturing, suggests that private sector BLS reported payroll jobs for non-manufacturing were unchanged in February.Taken together, these surveys suggest around 6,000 fewer jobs in February – far below the consensus forecast.
• Initial weekly unemployment claims averaged close to 338,000 in February. This was up from an average of 333,000 in January. For the BLS reference week (includes the 12th of the month), initial claims were at 334,000; this was up slightly from 329,000 during the reference week in January.
This suggests mostly layoffs in line with the consensus forecast.• The final February Reuters / University of Michigan consumer sentiment index increased to 81.6 from the January reading of 81.2. This is frequently coincident with changes in the labor market, but there are other factors too.
• The small business index from Intuit showed no change in small business employment in February.• Conclusion: Usually the data is mixed, but the data this month was fairly weak across the board. The ADP report was lower in February compared to the initial January report (January was revised down in the report today), the Intuit small business index showed no hiring, and the ISM surveys suggest essentially no change in payrolls in February.
There is always some randomness to the employment report – and the timing and survey methods are different than for some other reports – but my guess is the BLS report will be under the consensus forecast of 150,000 nonfarm payrolls jobs added in February.
Meanwhile, Goldman Sachs is also under-shooting:
BOTTOM LINE: The ISM nonmanufacturing index was weaker than expected in February. Some survey respondents cited adverse weather conditions as a cause of slower activity.
MAIN POINTS:
1. The ISM nonmanufacturing index fell to 51.6 in February (vs. consensus 53.5) from 54.0 in January. By component, business activity (-1.7pt to 54.6) and employment (-8.9pt to 47.5) fell, while new orders (+0.4pt to 51.3) rose a touch. The inventory index?which is not seasonally adjusted?was unchanged at 50.5 on an n.s.a. basis but seems to have declined substantially on an s.a. basis. Some survey respondents, in particular those in the wholesale trade and construction sectors, cited adverse weather conditions as a cause of slower activity. February’s decline leaves the ISM nonmanufacturing index at its lowest level since February 2010.
2. The ISM composite index?including both the manufacturing and nonmanufacturing surveys?fell 1.9pt to 51.8 in February. The composite index places considerably more weight on the nonmanufacturing survey.
3. As a result of the sharp decline in the employment component of the nonmanufacturing index, we have reduced our payrolls forecast to 125k and our private payrolls forecast to 130k.
I see no taper implications in any of this yet. The Fed has fingered the snow and will look for a rebound before shifting policy. With assets trading where they are, they need no extra support!
