Daily Archives: April 7, 2013 @ 9:39 pm (Sunday)

Karim: Payrolls/Tapering

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Karim writes:

Truly a mixed bag report, but in a broader context, trend of improvement in labor market remains in place

  • 6mth average of payroll growth now 189k vs 198k
  • Payrolls up 88k, with net revisions of +61k (Feb now up 268k)
  • Unemployment rate down to 7.6%, due to large (-496k) drop in labor force; U6 measure fell 0.5% to new cycle low of 13.8% (high was 17.1%).
  • Large outlier in retail trade (-24k vs 6mth average of 30k) suggests some seasonal adjustment issues related to unusual timing of Easter in March may have had an effect
  • Average hourly earnings unchanged but aggregate hours firm again (0.3%)
  • Total advance in labor income of 0.4% solid after 0.9% gain the prior month and sufficient to keep stronger consumer spending trend intact

Some more Fed comments on tapering in past 24hrs-with Williams and Lockhart starting to mention specific dates

WILLIAMS
Assuming my economic forecast holds true, I expect we will meet the test for substantial improvement in the outlook for the labour market by this summer, John Williams, president of the San Francisco Fed, said in a speech. If that happens, we could start tapering our purchases then. If all goes as hoped, we could end the purchase program sometime late this year.

LOCKART
*LOCKHART SAYS FED COULD POSSIBLY ANNOUNCE AN END DATE TO QE3 -CNBC

*U.S. FED’S LOCKHART SAYS “WOULDN’T TOTALLY RULE OUT” TAPERING ASSET BUYING BY THIS SUMMER -CNBC

*LOCKHART SAYS `GENERALLY THE TONE IS UPBEAT’ IN HIS REGION *LOCKHART SAYS THERE COULD BE `UNINTENDED CONSEQUENCES’ OF QE *LOCKHART SAYS `I’D LOVE TO SEE 7 PERCENT’ ON JOBLESS *LOCKHART SAYS `CURTAIL’ GOOD WAY TO TALK OF QE OPTIONS *LOCKHART SAYS 3 OR 4 OPTIONS ON QE

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Quick take: Payrolls weak

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>   
>   (email exchange)
>   
>   Bottom line: Weak report. Critical for us is the downward revision to the prior months avg
>   weekly earnings which was a driver of spending in Q1. The MArch number held up, but all in,
>   this report should drive home for folks that the Q1 spending outcome (likely near 3%), is
>   not going to come close to holding up in Q2. At this point we have Q2 spending coming in
>   at 1.5%.
>   
>   The decline in the U-rate was entirely a function of the labor force falling rather sharply
>   (so dismiss the decline in the u-rate)
>   

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