March 3, 2011
Sheraz Mian
Director of Research
In the run-up to the February Nonfarm Payroll report coming out tomorrow, the labor market remains in focus. Today’s better-than-expected Jobless Claims report and yesterday’s strong ADP report are pointing to a solid number tomorrow.
The weekly Jobless Claims numbers today were impressive by any measure. The weekly number dropped to the 368,000 level and even the four-week average fell below 400,000. This is the lowest level since May 2008.
I expect the market to find today’s report particularly reassuring. I am looking for the positive labor market momentum to offset the unsettling backdrop created by the Libyan turmoil and the resultant spike in oil prices.
I am cognizant of the fact that the government’s Nonfarm Payroll report has disappointed in three of the last four months, despite earlier signs pointing otherwise. These repeated disappointments account for the market’s hesitation in buying into the emerging labor-market-recovery narrative, even in the face of recent standout reports.
The employment components of the ISM Indices, in combination with the ADP and Jobless Claims data, are pointing to a strong report tomorrow. The last two months were held back by unfavorable seasonal factors. With those elements now behind us, we will get to see evidence of the underlying labor market improvement tomorrow.
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