July non-farm payrolls to disappoint a fifth month in a row?

August 3, 2012

U.S. non-farm payrolls have come in below the Reuters Poll consensus for the past four months, the longest streak since an eight-month period in 2008-09 when the U.S. was in the depths of recession and, at one point, losing more than half a million jobs a month.

Compared with a few years ago when there was a very wild range of forecasts on a given jobs report — the widest spread polled since the financial crisis began was 575,000 for the May 2010 data — economists are now huddling together in a pessimistic pack.

For the July data, due out at 1230 GMT, the range of forecasts in the Reuters Poll (on a consensus of 100,000) has narrowed to a 107,000 spread between highest and lowest, compared with 132,000 for the June data.

A narrowing of that spread means either greater conviction that the data will be weak (only 80,000 jobs were created in June), or a weariness amongst forecasters of being undercut over and over again. More likely it’s a combination of the two.

Over the past two years, payrolls have come out weaker than the most pessimistic forecast polled five times while they have blown out the top end of the range only once.

That shows just how reluctant economists have been to forecast a very bad release. It also shows just how disappointing the jobs recovery has been.

Coming after a stronger than expected jobs report from payroll services provider ADP, which to be fair has not been a reliable leading indicator of U.S. payrolls, it may just be this time that the data top the forecasters.

But we all can be pretty sure they won’t be strong.

- Additional reporting by Yati Himatsingka.

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