Brian S. Wesbury – Chief Economist
Robert Stein, CFA – Senior Economist
After the very strong ADP employment report on Thursday, many economists marked-up their forecasts for Friday’s official payroll report. We moved ours up 5,000, and went into the report at 140,000 net new private sector jobs. Ouch…the official report showed just 57,000 new private sector jobs and equities immediately headed south.
For bulls, this data was a huge disappointment. But employment is a lagging indicator. Other data have already been into, and out of, a “soft patch.” Moreover, as a forecasting tool, employment data has not always been perfect.
In 2004, when the labor market was recovering from its slump of 2001-03, the month-to-month data was volatile. Private sector job growth went from a high of 330,000 (in October) to a low of 28,000 (in November). Monthly job gains in 2004 were less than 50,000 three times, and greater than 300,000 three times. Volatile, eh?