As Americans attempt to thaw from this week’s Polar Vortex, Wall Street analysts have stepped back and wondered whether the inclement weather had a material affect on the economy.
Some economists have argued that employment, particularly construction employment, is harmed by cold weather. Here’s Goldman Sachs’ Kris Dawsey:
Regarding the near-term data calendar, we expect that colder-than-normal weather during the survey period for the December payroll report probably pushed employment growth below its recent trend. (Our preliminary forecast is for a 175,000 gain in total payrolls to be released this Friday.)
But in Wednesday’s ADP private payrolls report, construction had its best month of job creation since December 2006. We’ll of course get a better sense after tomorrow’s official BLS jobs report, but today it looks like construction employment had a very solid December.
So what gives? SocGen’s Brian Jones says that precipitation has a bigger impact on jobs data than does temperature. And the continental United States has been fairly dry in mid December. From Jones:
We expect weather conditions prevailing during the December canvassing period to have a limited impact on Friday’s report. According to data compiled by the National Oceanic and Atmospheric Administration, temperatures nationwide were roughly 5½ degrees below seasonal norms over the 8-14 December span. Yet, conditions were unusually dry over much of the continental U.S. during that period. Yesterday’s ADP report appeared to support our long-held view that precipitation has a much bigger impact on nonfarm payrolls than temperature. Indeed, the number of construction jobs counted by the private payroll processor jumped by 48,000 in December, after back-to-back 21,000 gains in October and November — the largest increase since February 2006.
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