With all eyes hope-full-y transfixed on tomorrow’s non-farm payrolls data and its confirmation-biased ‘select-a-headline’ post-data farce, we thought it worth a look at the noise in the signal and a reminder, as Bloomberg’s Joseph Brusuelas notes, the annual benchmark revisions that will be published and likely obliterate everything we thought we knew about job growth (or lack of). As Brusuelas notes, the January jobs report is likely to be better-than-forecast because the weather-impacted December estimate will see upward revisions as firms probably made up for hiring postponed during the previous month.
While the topline gains would be sufficient to keep the withdrawal of policy accommodation on pace, the decline in the unemployment rate may force the Fed to reduce its unemployment threshold to 6 percent from 6.5 percent and to consider pushing back when it begins to normalize its policy rate.
Lastly, the Department of Labor will publish its annual benchmark revisions to its comprehensive estimate of employment on Friday. That should add about 350,000 to the overall level of employment. Even so, the two-month average of the total change in employment should remain at or near the six-month average of 185,000 in private job creation.