Pre-Jobs report commentary

I have been commenting publicly the last few months about the probability that there is going to a blockbuster jobs report that will surprise everyone on the upside and that is what I want to talk about today.  As my regular blog readers know, we have seen very disappointing jobs reports the last two months, not because they didn’t create jobs because they did but because they were not close to the expectation of jobs created.  In both cases it was dismissed as related to bad weather and seasonal factors, all of which could be true, but I have another take on it.  I believe that companies are not hiring because they have discovered that they can operate with less and still do fine.  Just look at the stock market over the last year and you will see it has gone consistently up and shareholders have loved this.  This won’t last forever and as I have mentioned earlier, at some point this year, employers will realize they can’t work their existing employees any harder even if they pay them more.  At that point they have to hire in order to grow and there is not a company who doesn’t want to grow.  Do you know of a company that just wants to stay the same size forever, because I don’t.      Maybe this turning point in the hiring process becomes evident tomorrow.  I say this because one of the important data points I watch  is the weekly jobless claims which have been trending down for months now.  Also look at the ADP jobs number which measures their own payroll clients to gauge the hiring picture and that has shown greater hiring, just look at this week’s number which was up 217,000.  There is not a perfect correlation between the ADP number and the government’s number especially in the short run, but over time is smoothes out and seems to track each other pretty well. Another data point is the manufacturing sector which this week reported a reading of 61.4 and non-manufacturing came in at 59.7 today.  A reading above 50 in both case represents growth in that sector .  Take all this together and you get a picture of an economy that is expanding not contracting and that has to be good for the labor market.  The consensus for tomorrow’s jobs number is +215,000 with the possibility that the unemployment rate will ratchet up to 9.3%.  This is  because more people are re-entering the job market thereby increasing the rate.  I would not be surprised to see the number as high as +275,000 and the unemployment rate back in the mid 9s.