Foreword
An important excerpt from Monday's research missive (3/29, "Market
Update"):
"This Friday, the Labor Department will release employment data covering
March. The consensus forecast for the payroll survey is an increase of
110,000 to 120,000 jobs, versus the paltry 21,000 gain in February. However, there
are rumors beginning to float around that the reported growth in March payroll
employment will be a much larger number.
"...There is now so much statistical static ('static' being a euphemism
for something more like 'garbage') imbedded in the data that one of these
months, there is going to be a major surprise. It could occur from nothing more
than the catch-up of what are some serious seasonal-adjustment distortions I
believe remain in the numbers.
"...It is highly likely the entire Treasury curve would be hit pretty
hard by an especially strong employment report. This is because of the major,
major deal Greenspan and the Fed have made of employment growth vis a vis
continuing accommodative monetary policy ... The growing belief the Fed will not
alter rates at all during 2004 has emboldened hedge funds in particular with
regard to their highly leveraged debt-market 'carry trades.' Any significant jolt
to this psychology could roil the fixed-income markets in a very material
way! And because of various 'interconnects' in the equation, trouble in the debt
market could definitely spill over into stocks."
Today's Employment Numbers
Earlier this morning, the Labor Department released employment data
covering March. Based on the report, the unemployment rate rose 0.1%, to 5.7%,
while payroll employment grew by 308,000 jobs.
Reported results for the unemployment rate were worse than the consensus
forecast, which predicted no change. However, results for payroll employment
far exceeded the consensus forecast, which was looking for a gain in of
roughly payroll 120,000 jobs.
There are two components to each month's employment report, the household
survey and the payroll survey. The unemployment rate is derived from the
household survey, making it a visible, highly sensitive number for political
purposes. The payroll survey represents the number generally more important to
the behavior of the financial markets. The report today indicated an increase
of 308,000 jobs during March. This compared with a decline of 110,000 in
payroll employment during March of 2003.
Today's report included substantial upward revisions to February and
January payroll data, to +46,000 from +21,000, and to +159,000 from +97,000.
Thus, including revisions, payroll employment over the last three months increased
by a net of 513,000 jobs, compared to the 426,000 gain before the February
and January adjustments. (For the same three-month period in 2003, payroll
employment contracted by 175,000.)
The following table puts into perspective the reported growth in payroll
employment over the trailing three months, versus the comparable period during
the prior five years.
---------------------------------------
TRAILING THREE-MONTH PAYROLL EMPLOY-
MENT GROWTH (Thousands of Workers)
---------------------------------------
Mo. 2004 2003 2002 2001 2000 1999
---------------------------------------
Mar. 308 -110 43 15 493 124
Feb. 46 -159 -90 104 146 396
Jan. 159 94 -165 -53 194 113
---------------------------------
Tot. 513 -175 -212 66 833 633
=== === === === === ===
---------------------------------------
According to today's report, average hourly earnings rose two cents in
March, to $15.54. This represented a gain of approximately 0.1% from February's
$15.52, which was unchanged from last month's report. Year over year,
average hourly earnings were up 1.8%.
The table below contains the latest available results for key employment
and inflation series.
-------------------------------------------------
KEY U.S. EMPLOYMENT AND INFLATION DATA
-------------------------------------------------
PAYROLL
UNEMPLOYMENT EMPLOYMENT AVERAGE HOURLY
RATE CHANGE EARNINGS
(%) (000s) ($s)
--------------- ---------- -----------------
Month Yr. Yr. Yr. Year/
/Year No. Ago No. Ago No. Ago Year
--------------- ---------- ------------------
03/04 5.7 5.8 +308 -110 15.54 15.27 1.8%
02/04 5.6 5.9 +46 -159 15.52 15.27 1.6%
01/04 5.6 5.8 +159 +94 15.49 15.18 2.0%
12/03 5.7 6.0 +8 -209 15.45 15.18 1.8%
11/03 5.9 5.9 +83 -37 15.46 15.13 2.2%
10/03 6.0 5.7 +88 +83 15.43 15.10 2.2%
09/03 6.1 5.7 +67 -47 15.41 15.05 2.4%
08/03 6.1 5.7 -25 +11 15.41 15.00 2.7%
07/03 6.2 5.8 -45 -111 15.40 14.96 2.9%
06/03 6.3 5.8 -14 +25 15.34 14.93 2.7%
05/03 6.1 5.8 -28 +2 15.31 14.86 3.0%
04/03 6.0 5.9 -20 -68 15.25 14.81 3.0%
-------------------------------------------------
EMPLOY. COST INDEX (%)* PRODUCTIVITY (%)#
----------------------- ------------------------
Year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Yr.
----------------------- ------------------------
2003 1.3 0.9 1.0 0.7 3.4 6.2 9.5 2.6 4.4
2002 0.9 1.0 0.8 0.7 9.8 0.7 4.5 2.3 5.0
2001 1.1 1.0 1.0 1.0 -0.1 3.1 1.6 7.0 2.1
2000 1.2 1.0 0.9 0.9 -1.7 7.5 -0.4 3.3 2.8
1999 0.4 1.1 0.9 1.1 2.7 0.6 3.0 6.5 2.8
1998 0.7 0.8 1.0 0.7 3.0 1.3 3.0 4.0 2.6
1997 0.7 0.8 0.8 1.0 -1.2 4.0 4.2 0.9 1.7
-------------------------------------------------
CONSUMER PRICE INDEX## PRODUCER PRICE INDEX@
-------------------------- ---------------------
Month Yr. Year/ Yr. Year/
/Year Index Ago Year Index Ago Year
-------------------------- --------------------
02/04 186.3 183.2 1.7% 145.8 142.8 2.1%
01/04 185.8 182.2 2.0% 145.7 141.1 3.3%
12/03 184.9 181.6 1.8% 144.8 139.3 3.9%
11/03 184.6 181.4 1.8% 144.5 139.7 3.4%
10/03 184.9 181.2 2.0% 144.7 140.0 3.4%
09/03 185.1 180.9 2.3% 143.8 139.0 3.5%
08/03 184.5 180.6 2.2% 143.5 138.6 3.5%
07/03 183.8 180.1 2.1% 142.8 138.6 3.0%
06/03 183.5 179.7 2.1% 142.7 138.8 2.8%
05/03 183.3 179.5 2.1% 141.9 138.5 2.5%
04/03 183.4 179.4 2.2% 142.5 139.1 2.4%
03/03 184.0 178.5 3.1% 144.6 139.1 4.0%
-------------------------------------------------
NOTE: All data are seasonally adjusted. *Total
civilian compensation, 3-month change. #Nonfarm
business output per hour, annual rates. ##All
urban, all items. @Finished goods.
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