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NFP: Revisions & Estimates

Friday, February 02, 2007 | 07:16 AM

Its that time: Today, we get January Non-Farm Payroll data from the BLS. Consensus is 167,000 new jobs, with unemployment steady at 4.5%.

The bigger news is the annual Labor Department's benchmark revisions (April 2005 through March 2006). Its a total wild card: BLS estimated the revision could be as high as 810,000 jobs for the year. Estimates (not revisions) for the April-December 06 are also due.

If the revisions come in as expected, that means the BLS has been undercounting jobs by ~40%. That is an astounding miss. (How much of a role Katrina played wreaking havoc with Gulf Coast data collection is also an unknown) If that's the case, perhaps its time for BLS to do a full blown review of their methodology. Having more accurate and timely data production would be a huge assist for Corporate Strategic Planners, Wall Street, and government planners -- including the Federal Reserve itself. Yes, its arcane data management, but someone in Congress should be pressing for this to be corrected so reports are accurate on a timely basis.

Unless the revisions are way soft, the expectations for the Fed cutting in 2007 are all but toast. And ironically, its as even more soft economic data has surfaced. ISM, like Chicago PMI, has dropped to ~~recessionary~~ "manufacturing contraction" levels. US car sales in January were punk, with GM sales dropping 17% and Ford sales off 19%; For the month, total US vehicle sales (all makes and models) fell 4.6% y/y. The big 3's market share of US auto sales is at a record low 50.6%.

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We know the GDP data was skewed, and is likely to be revised downwards. (Recent history has been NFP revised upwards and GDP revised downwards). That's before we consider how much economic activity was borrowed from future months courtesy of the balmy January weather.

The bifurcated economy continues apace: While I expect continued weak auto and housing sales, strong sentiment data implies strong (or at least decent) job growth.

But as to the BLS release? Initial NFP data is anyone's guess . . .