Once again, it is time for the high profile jobs report. Set for tomorrow at 7:30 am cst, market expectations are for the following;
- Nonfarm Payrolls – Minus 524K jobs
- Unemployment Rate – 7.5%
- Hourly Earnings – Plus .2
- Hourly Workweek – 33.3 hours
If you look at the industry-by-industry numbers, along with the weekly unemployment claims used in this report, the number looks closer to minus 499K. The wildcards are construction and manufacturing on the goods-producing side and retail/professional on the services-producing side. We see this group as fairing worst than expected, taking the jobs number closer to minus 550K/560K.
Likewise, the unemployment rate looks to us to be more in the neighborhood of 7.6%/7.7%. Surging layoff announcements (jumping) and regional manufacturing reports (dropping) also help build our case.
What others are saying:
- ING minus 750K and 7.5%,
- Merrill Lynch minus 600K and 7.6%,
- JPMorgan minus 550K and 7.1%.
As we have said in the past, the Employment Report is the highest profile, most market-volatile piece of economic data to hit the street each month. Given our estimation is correct, we would expect stocks to suffer and bonds/notes/mortgage backs to improve. The higher the jobs loss number, the more the market will rally. Any number below 500K in jobs loss should send the Dow up 400 to 500 points, feeling as if the worst is behind us.
Lock your mortgage rates, dice rollers are living on the edge with this market.