With so much going on this week, I’d like to give you the “fast and furious” version for today’s jobs report.
- Nonfarm Payrolls – Minus 5K
- Unemployment Rate – 10.1%
- Average Hourly Earnings – Plus .2%
- Average Work Week – 33.2 Hours (unless you are in Mortgage Banking)
One of the difficulties with handicapping today’s report is that of revisions. Seasonal revisions, benchmark revisions, and workweek revisions (now all workers rather than production and nonsupervisory) will present themselves and need to be accounted for. A trend towards stability in Manufacturing, even if it is primarily inventory rebuild, is also in the mix. Some are calling for an improvement in construction jobs due to milder January weather but I’m not sure exactly where they live. Texas has been nothing but cold and rainy.
Street talk is looking for the government sector to prop up jobs with more consensus workers hired and on and on. Seems to us like the “Street” is trying to talk itself into a bullish jobs number, one that could see growth of 20K to 30K. Matter of fact, Barclays is calling for a net job creation of 25K jobs. We see this report as not so rosy.
Given the recent uptick in Weekly Claims (used in the household survey), the ADP call for job losses of 22K, and our view that the labor market is losing jobs as fast as they are creating them leads us to the following “guess”:
- Nonfarm Payrolls – Minus 30K
- Unemployment Rate – 10.2%
- Average Hourly and Average Workweek to be spot on with consensus.
Given that the “Street” is looking for better than expected numbers, that reality would once again put a top in our market and produce higher yields, worsening mortgage pricing post release. We do feel that any selling will be shallow as the global doom and gloom will be with us for some time to come. Stocks would benefit and maybe just in time to save that market from a much bigger correction. If our bias is correct, you should see mortgage pricing hold steady to improve, watching to see if stocks can find their sea legs.