Payroll Employment Forecast
Regular readers know that we have developed a good regression model linking various economic data with the monthly payroll employment report. Our prediction this month is for a gain of 154,000 jobs, more than the 135,000 consensus and more than the 120,000 needed to maintain the current unemployment rate of 4.5%
There are two main problems with forecasts of the job change:
- Our model (and those of everyone else) uses the final data series from the BLS. This is after all businesses finally report in the survey and benchmark revisions have been applied. The benchmark changes come a year or so later, and can be signficant. This is all part of the non-sampling error.
- The sampling error for the report has a 90% confidence interval of almost 100,000 jobs! That means that even if you knew the truth, the BLS might miss in its estimate.
You can check this out by playing our Payroll Employment Game. It is cheaper and more fun than betting on the actual report. The PEG site has a lot of information about the BLS method and surveys, as well as other charts and data.
Our prior work on this subject can be found here.