Beyond the headlines of the February Jobs Report

This Friday, the Bureau of Labor Statistics will release the February Employment Report. The consensus headline Non-Farm Payroll (NFP) figure is 200K, and consensus monthly change in Average Hourly Earnings (AHE) is 0.2%.

Johnny Bo Jakobsen observed that forecasts based on ISM employment points to a strengthening job market. Based on this analysis, I am tempted to take the the over on NFP and AHE.


Even as the market focuses intensely on NFP and AHE, there are far more important internals to watch beyond the headlines.

Leading employment indicators

Here are two important indicators that I am watching. First of all, what is happening to the momentum of job growth? New Deal democrat recently proposed a simple model of employment and interest rates. Whenever the YoY change in the Fed Funds rate has exceeded the YoY change in NFP, a recession has followed within 12-24 months.


One leading indicator of NFP growth momentum is the temporary job market. While we only have two complete cycles of data, temp job growth have historically led headline NFP growth. Temp jobs have flattened out since the November report, which could be an early warning that jobs market growth is becoming mature, or hitting capacity. Neither interpretation would be good news.


I have been saying that the American economy is in the late stages of an expansion. The February Employment Report will be another data point in that assessment. After that, recession probabilities is dependent on the Fed`s reaction function.

Stay tuned.

1 thought on “Beyond the headlines of the February Jobs Report

  1. The North Korea situation looks like it is being solved between the two Koreas. That is positive for the Far East region that isn’t getting much traction in the media.

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