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What to Look for in Tomorrow's Jobs Numbers

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The household employment number is said to be the true leading indicator for jobs.

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Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial).

My watch level for tomorrow's jobs report is 139,817,000. That's the "must have" household employment number for May. I focus on the "household" versus the headline non-farm "establishment" number because the bullish economists have told me it's the true leading indicator for jobs. So, yes, recent weekly unemployment claims numbers have been stuck on the high side. Likewise, the ADP private employment gains have been tepid -- including today's 55,000 print. And, heaven forfend, even if the here-today-gone-tomorrow 417,000 Census worker gain for May (already published by the Census Bureau) turns out to account for the lion's share of a 500,000+ establishment number tomorrow, don't be troubled!

The real good news is in the household survey because it allegedly picks up the "hiring spree" now underway in the small business sector. For several months now, the bullish talking heads have pounced on the household employment number within seconds of the monthly release, and have noted that the gain has averaged 400,000 per month since December -- a trend which would continue in May if my target is hit.

Now for the full disclosure. My bovine friends were deathly silent about the "household" survey number during the entire second half of 2009, choosing to focus on the "less bad" trend of the "establishment" numbers, instead. For good reason. From July through December, the household survey clocked a 400,000 monthly decline -- for a total of 2.0 million job losses over the last five months of 2009. Stated differently, if we hit my May target the household survey job count will have roared ahead... all the way back to July 2009!

To be sure, we're told over and over again that jobs are a lagging indicator. So maybe the 2 million jobs lost amidst the burgeoning green shoots of last year's second half were the necessary prelude to this year's V-shaped rebound. Then again, it's just possible that the unprecedented 8 million jobs collapse of the last two years has played havoc with the BLS's seasonal adjustments, and that we've actually gone nowhere on the jobs front since last summer. When the bulls stop talking about the "household" survey we'll know the answer.
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