Photo: krossbow via flickr
A variety of parties have now freaked out about the jobs data for April.But Deutsche Bank’s Joe LaVorgna is not ready to buy into the hysteria just yet.
He’s waiting until next week.
In a note today, LaVorgna is sticking to his model that suggests last week’s data is merely a temporary speedbump on the way to more jobs added.
Here’s the full cut:
“At present, claims are telling us that the slowdown in employment should be temporary and that job gains should pick up modestly in the months ahead.
“Of course, if claims were to rise substantially from their current readings, then the recent slowdown in employment will persist.”
“The year to date average on claims is 373k. This compares to 417k last year and 476k the year before. As shown in the chart below, the level of claims tends to be inversely proportional to the rate of hiring. Over time, as layoffs slow, employment inevitably tends to accelerate. Last week, jobless claims fell -27k to 365k.
“As we had projected at the time, claims declined based on a reversal of the Easter effect. If claims edge -5k lower this week, which is what history suggests, the four-week moving average on claims falls to 377k from 384k, very close to its current year to date average and consistent with our view that nonfarm payroll gains should average around +200k per month. Next week’s jobless claims report covers the survey period for May employment, so it takes on added significance.”
Most likely, there will be a variety of noise and revisions that will prevent any hard conclusions — which would also leave the model in tact.
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