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Will December NFP Beat Estimates Again?


The BLS reported that NFP were above expectations for five consecutive month. The July figures came in at twice the expected level. The number of jobs that the American economy can create seems to have been underestimated by economists.

It is possible that this is a net rather than a gross figure. Every month, 6 million people search for new jobs. About 4 million of them are switching jobs to find a better job, usually one that pays more. More accurately, the NFP signifies whether more people have found work or lost it.

Market implications can be caused by a quirk in numbers

Given the extraordinarily high “churn” (the number of quits and rehires within the same month) NFP represents dynamism in the labor market. Which isn’t the same as the number of jobs created. Because there are two aspects of the labor market: the number of job offers, and the number of people taking up jobs.We’ve written extensively about how there are vastly more job offers than there are people seeking jobs. Which is why we have to be wary about the concept of “job creation”. If new jobs are being offered, then it is important to consider whether…

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