Tomorrow’s Jobs Report

May 3rd, 2012 at 5:36 pm

Expectations are for payrolls to increase by 165K and for unemployment to stay about where it is.

My forecast is a bit more pessimistic than that based largely on:

–recent uptick in UI claims;

–weak ADP number (a private payroll survey that came out yesterday, showing 119K private sector jobs—however, month-to-month it’s not a reliable predictor for the BLS release, so don’t be too worried);

–sloggy GDP growth;

–more payback on the seasonals (i.e., the unusually warm winter meant higher employment in earlier months and less job growth now).

On the other hand, if I’m wrong and we exceed expectations, that might have something to do with this figure from this AM’s productivity report.

Source: BLS

As you can see, on a quarterly basis, productivity actually fell in the first quarter, but I prefer to look at the yearly changes.  They too show a deceleration such that output per hour expanded only 0.5% over the past year.

Now, you might be thinking that’s awful, and it’s certainly the case that output (the numerator in the productivity equation) is growing too slowly.  But such low productivity growth implies employers may have to hire more workers to meet even relatively weak demand.

So, stay tuned and we’ll see how this bounces in the AM.  I’ll be on CNBC right after the report comes out, so tune in if you want to hear first impressions.

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