February 28, 2010
Please consider Payrolls Probably Declined in February: U.S. Economy Preview
Payrolls probably fell by 50,000 after declining 20,000 in January, according to the median forecast of 62 economists surveyed by Bloomberg News before the Labor Department�s March 5 report.March 3, 2005
�Even leaving aside the effects of inclement weather, the economy still appears to be shedding jobs,� said Aaron Smith, a senior economist at Moody�s Economy.com in West Chester, Pennsylvania. �Although businesses have stopped cutting inventories and are beginning to invest more, they have been more hesitant to increase their hiring.�
�The weather will certainly play a role,� said Raymond Stone, managing director and an economist at Stone & McCarthy Research Associates in Skillman, New Jersey, who projects payrolls will be reduced by as many as 200,000 because of the storms. His overall forecast is for a decline of 150,000 and he referenced a snow-related payroll drop in January 1996.
All that snow talk got economists to revise their forecasts. On February 28, the estimate was -50,000. The jobs estimate is now -65,000.
Please consider Weather to Make U.S. Jobs Report Hard to Decode, Economists Say
Amid signs that the U.S. economic recovery is about to start creating jobs, the influence of bad weather will make the government�s February employment report difficult to decipher, economists said.Snow Analysis
The world�s largest economy probably lost 65,000 jobs last month, more than triple the 20,000 drop in January payrolls, according to the median forecast of economists surveyed by Bloomberg News before the Labor Department�s March 5 report.
Snow in parts of the country that caused some businesses to temporarily close during the government�s survey week may potentially depress the payroll count by as much as 220,000 workers, according to Joel Prakken at Macroeconomic Advisers LLC. One thing is certain, the Labor Department will not precisely quantify the storms� effect.
�The inability to gauge the impact of weather-related distortions with any real degree of precision means Friday�s employment report is one of the least important in quite some time,� David Greenlaw, chief fixed-income economist at Morgan Stanley in New York, said today in a note to clients.
Household Survey
Any divergence from established patterns for the month will help inform economists of the snow�s impact. About 290,000 people on average say bad weather has prevented them from getting to work, according to February figures going back three decades.
The most recent storm of similar intensity that occurred during a survey week was in January 1996. The current data for payrolls that month, which have gone through several revisions since the initial estimate, show a 19,000 drop in employment.
Raymond Stone, an economist at Stone & McCarthy Research Associates projects payrolls will be reduced by as many as 200,000 because of the storms. His overall forecast is for a decline of 150,000 and he referenced a snow-related payroll drop in January 1996.
Snow Fact
The most recent storm of similar intensity that occurred during a survey week was in January 1996. The current data for payrolls that month, which have gone through several revisions since the initial estimate, show a 19,000 drop in employment.
Snow Analysis
The government�s survey week may potentially depress the payroll count by as much as 220,000 workers, according to Joel Prakken at Macroeconomic Advisers LLC.
Snow Fact
Payroll count might be depressed by 220,000 workers?
How?
For the household survey: Who is counted as employed?
Persons also are counted as employed if they have a job at which they did not work during the survey week, whether they were paid or not, because they were:
- On vacation
- Ill
- Experiencing child-care problems
- Taking care of some other family or personal obligation
- On maternity or paternity leave
- Involved in an industrial dispute
- Prevented from working by bad weather
For the establishment survey: What is the CES definition of employment?
Employment is the total number of persons on establishment payrolls employed full or part time who received pay for any part of the pay period that includes the 12th day of the month. Temporary and intermittent employees are included, as are any employees who are on paid sick leave, on paid holiday, or who work during only part of the specified pay period.Thanks to Caroline Baum for the above links.
Snow Job Decoding
Did 220,000 people not receive any pay for the period in question?
Color me skeptical.
In terms of the unemployment rate, the blizzards will not have an effect. In terms of the reported jobs number there will be an impact but the most likely impact is in the number of hours worked.
Regardless, expectations as to the importance of the blizzard range from negligible all the way to 220,000. Whatever the affect was, it will be over by next month although I have seen analysis that says the effects will last until May.
Based on the 4-week moving average of weekly unemployment initial claims, something in the neighborhood of 60,000 to 100,000 jobs lost would seem reasonable. Guesses are always a pot shot, but let me guess an optimistic 85,000 jobs lost.
However, I have no idea what kind of seasonal adjustment nonsense the BLS will pull off, or if further revisions to the Birth-Death adjustments are coming. Those adjustments could balance out or have a cumulative effect, with widely varying results.
If the number is much higher, just don't blame it on the weather. And whatever it is, short of a preposterous -10,000 or better, try not to be surprised.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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