“At the risk of putting legions of economists and commentators, as well as myself, out of a job, the attention given to the monthly US non-farm payrolls number actually makes little sense, for two reasons,” says Russ Mould, AJ Bell Investment Director. “First, it is never a good idea to react to just one number in isolation – it is better to look at the trend in the data and place these figures in a broader context. Second, jobs figures are by their very nature backward-looking – just think of how long it takes a firm to feel confident enough to hire more staff, go through the recruitment process and then get the right candidates to sign.”
Mould continues: “Investors could use their time more effectively by checking out lead indicators such as manufacturing and service industry sentiment surveys and new durable goods orders, or concurrent indicators such as retail sales and industrial production. GDP growth and jobs numbers are less useful as by their very nature they refer to the past and markets should have moved on by the time they are actually published.”
Notes for Editors
- A spreadsheet summarising the latest headline US economic data, in data and chart form, is available on request.
- The latest batch of sentiment surveys in the US have generally proved disappointing, with the Richmond, Philadelphia, Kansas, Empire State, Dallas and Chicago indicators, as well as the national Purchasing Managers Index, all trending lower during the first quarter of 2015.
- Non-farm payrolls numbers for January and February have exceeded expectations of late and also enjoyed a series of positive upward revisions to historic data (which has tended to be a good sign).
- The consensus forecast is for the addition of 247,000 non-farm jobs in March, compared to the initial estimate of 295,000 for February.