Employment Report Preview
A challenge for the market is the ongoing evidence of further weakening in the economy. Each month the market places tremendous emphasis on the employment situation report.
The market is correct in believing that employment is important. It is wrong in expecting too much from a measure that attempts to estimate total employment in two different months, subtract one from another, and report the difference. The sampling error alone is +/- 100K jobs, and there are plenty of other non-sampling issues. Readers can check out their own estimates on our Payroll Employment Game site.
Our own method asks what reported job change (after all sampling and benchmark revisions) would be consistent with other economic reports. For a more complete description, please check out this past article.
Our method suggests that the job loss may exceed projections by a wide margin, perhaps exceeding 200K. Were this to occur, it could create significant market weakness in front of the House vote on the "bailout" legislation.