IT GETS EVEN WORSE: Goldman Says The Worst Of The Good Weather 'Payback' Hasn't Even Happened Yet

Photo: Flickr via mike_miley

Think that Friday’s jobs report was weak because the warm winter weather pulled employment forward?Bad news: There’s more to come.

Andrew Tilton:

The March employment report was a disappointment, with payroll growth falling well shy of expectations, and the unemployment rate declining only because fewer people looked for work. Although we find some evidence of a “weather payback” in the report, we think the bulk of the payback for payrolls is still to come in April and possibly May as temperatures move back towards seasonal norms.

An important question heading into the report was how large the “weather payback” would be. In mild winters, fewer layoffs occur in weather-sensitive sectors, resulting in bigger seasonally-adjusted employment gains. The winter of 2011-12 has been exceptionally mild–the fourth warmest ever recorded, according to the National Oceanic and Atmospheric Administration, in records that go back to the late 19th century. What’s more, temperatures became warmer and warmer, relative to seasonal norms, from autumn 2011 through February or March. In prior work on state-level data we estimated that the cumulative effect on the level of nonfarm payrolls as of February was at least 70,000 and possibly as much as 110,000-120,000.

With the March report now in hand, this analysis still looks broadly correct, although there does appear to have been some modest payback, which we estimated immediately after the report to be in the neighbourhood of 10,000-20,000 jobs based on the moves in employment in a few sectors that are clearly weather-sensitive, like construction.

Bottom line: We’ve got a lot more to go.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at

Tagged In

moneygame-us weather