Jobs Report Strategy

Handicapping this month's Jobs Report is made a bit difficult currently due to a wild card - the temporary hires being made to conduct the US Census. The government is planning to hire 1.4 million part time workers to run the 2010 Census, but it isn't clear exactly when or how many of these hires will be or have been made in any given month. However, when these "job creations" hit, they could possibly skew the real employment picture by painting a much more rosy scenario than what actually exists, and last month's Jobs number was an example.

From a fundamental standpoint, we have to peel back last month's Jobs Report and saw that the "birth-death" ratio added 217,000 jobs to the reading, thereby helping provide a better than expected loss of "only" 345,000 jobs. Do you really think that 217,000 new jobs were added by the creation of new businesses last month? Bottom line...without this birth-death estimation by the Bureau of Labor Statistics jobs losses would in reality have eclipsed a half a million last month. I don't think the economy is adding many jobs right now, and there will likely be higher job loss revisions down the road which will lead to a continued uptick in the unemployment rate.

With the slack in the labor market, many are forced to find part-time employment. And upon an economic recovery, many businesses may just take these part-time workers and make them full-time employees...which would keep unemployment rates high for a longer amount of time. This is where the phrase "jobless recovery" comes from...we could see the economy start to pick up, but new hiring can lag for behind.

I expect tomorrow's report to be ugly, and will likely include some revisions to prior reports showing more job losses, as well as an uptick in the unemployment rate.