For someone who’s brilliant at finding the dark cloud surrounding every silver lining, we didn’t expect this to be David Rosenberg’s take on the day’s jobs report:
If it weren’t for the ADP report, investors would be treating today’s employment data basically as an as-expected outcome. Yes, the headline for nonfarm payrolls was still light at +103k, but there were 70k of upward revisions to the prior two months. Sifting through the numbers, it is apparent that the blizzards dampened the headline figure by roughly 25k. Moreover, for a change, even the birth-death model did not add to the headline but in rare form actually subtracted 1k in December (when this effect is measured appropriately as it is not seasonally adjusted).
If you are bullish on the economic outlook, you can easily do some adjustments and come to the conclusion that today’s payroll number was actually closer to 200k than 100k. On top of that, the Household survey did rebound by 297k after two awful months, and led by full-time positions this time around. In fact, when the BLS puts the Household survey on a comparable footing to the Establishment survey (the payroll- and population-concept adjusted data) it showed a whopper of a +500k increase last month, the largest increase since January 2010. The payroll diffusion index also surged to 60 from 52, the best level in two months, and indicative of more firms adding to their staff loads last month. So while the low headline number did not show much in the way of size, the diffusion index did show some decent “breadth” in equity market lingo.
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