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There’s nothing like a good snow storm to mess up your economics forecasts.With snowstorm Nemo having torn through the Northeastern U.S., Deutsche Bank’s Joe LaVorgna is now finding himself slashing his jobs February jobs forecast:
…This is the survey week for February nonfarm payroll employment so we are concerned the next batch of jobs data could be adversely affected by inclement winter weather. The Bureau of labour Statistics provides data on the number of people who could not report to work because of bad weather—we have dubbed this series “weather workers”, and the top five months for weather workers are the following: January 1996 (1846k), January 1977 (1100k), January 1982 (1079k), February 2010 (1031k) and January 1978 (843k). Using initially reported nonfarm payroll figures, the average reading for these five months is +2k, although the economy was in recession in January 1982 when payrolls were down -231k. If we exclude this observation, then the average gain is 62k, better but still obviously very weak. In light of the possibility that February nonfarm payrolls are adversely distorted by weather, we are estimating only a +125k increase, down from a trailing three-month moving average of +200k. However, if jobless claims trend lower during the employment survey week and other measures of employment such as the ISM and ADP surveys show further improvement, then we will obviously adjust our forecast accordingly. Moreover, the level of January employment is likely to be revised higher, as this has occurred in four out of the last five years. Incidentally, the survey for the unemployment rate is conducted one week later, so there should not be a noticeable impact on the rate, which we expect to edge down one-tenth to 7.8%.
Of course it’s still way too early to make any conclusions since the month isn’t even halfway over. But for now, he’s looking for just +125k.
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