It’s jobs day.
Economists surveyed by Bloomberg estimate US companies added 230,000 nonfarm payrolls in January.
The actual report is likely to beat or miss that number.
But whatever the case, High Frequency Economics’ Jim O’Sullivan warns against putting to much weight into the number.
Be wary of January payrolls data! While the data are noisy in general, limiting the information value of a single reading, the seasonal adjustment process is especially challenging in January. Payrolls typically fall by at least 2.5 million before seasonal adjustment in January. The 144K rise in seasonally adjusted payrolls in January 2014 — the weakest gain of the year — reflected a 2.818 million decline before seasonal adjustment and a 2.962 million boost from the seasonal factors. Moreover, that 144k figure was up from a “first print” of 113k.
Bottom line: Monthly jobs reports are always revised, but seasonal adjustments are particularly noisy in January.
For what it’s worth, O’Sullivan forecasts a +210,000 number for nonfarm payrolls added in January.
“However, given the potential for surprise, we can’t say we have a lot of confidence in that estimate,” he wrote. “We are more confident that the underlying trend remains solidly over 200k per month, which is more than enough to keep the unemployment rate trending down.”
MarketWatch thinks O’Sullivan is the most accurate forecaster on Wall Street, so it may be worth listening to him.
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