Not Really A Massive Payroll Miss, Just Reopening

Huge miss. Whopping dud. Maybe it wasn’t nearly that bad?

The consensus forecast had called for payroll growth in April 2021 of something like +980,000, in line with the previous blowout estimate for March. In the updated batch, first that prior one was revised downward to just +770,000 and then the latest guess put the current month at a seemingly awful +266,000. That’s the big disappointment.

While two consecutive months nearer a million would’ve been a much clearer reopening signal, taking the actual totals the average still works out to a bit more than +500,000 for both. That number is right in the same area as our informal, unscientific “model” had been suggesting based upon both jobless claims as well as JOLTS turnover mining for comparisons.

In reconciling all three data points to each other a month ago, I observed:

While on the surface it may seem as if jobless claims and the Establishment Survey are looking at completely different economies, they aren’t actually as far off as maybe first pictured given their respective results and how those results are changing over time. However, there does remain some level of disagreement as to the degree which imprecise estimates cannot directly solve…All three of these employment estimates show that the labor market in 2021 is absolutely improving. Two of them (JOLTS, jobless claims) pose serious questions as to whether it is enough. The other (CES) is becoming more of an outlier (at least in February-March 2021), particularly for any sense beyond simple non-economic reopening.

What happened for April payrolls (CES) is that it is no longer the outlier; it came back down into that reopening range already plotted by the others. Again, the two-month average works out close to what jobless claims and JOLTS were indicating, as I said just yesterday before the BLS threw a wrench into what had been before today clear and spectacular.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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