The labor data since last fall has been rather encouraging, writes UBS' Art
Cashin in a note today. However, he is skeptical along agreeing with "lots of
folks [who] think it may be the warm winter weather that accounts for it."
That makes sense on several levels.
The warm weather allows construction and other “outdoor” industries to maintain or begin projects. They need workers for that.
Second, the warm weather avoids the short shutdowns for winter storms often seen in January and February.
A recent Morgan Stanley report on why they think the “weather benefit” may soon wear off noted:
The odd thing about the nearly identical patterns is that the winter of 2010/2011 was not as benign as this season. That suggests (to me, at least) that it may be more than just the thermometer that’s helping the numbers. It could be distortions in seasonal adjustment factors that got warped in the post-Lehman collapse. Just a thought.
That makes sense on several levels.
The warm weather allows construction and other “outdoor” industries to maintain or begin projects. They need workers for that.
Second, the warm weather avoids the short shutdowns for winter storms often seen in January and February.
A recent Morgan Stanley report on why they think the “weather benefit” may soon wear off noted:
Longtime readers will recall, that I have noted some similarities between the recent claims data and those a year before. Since September 2011 through early March 2012 there has been marked improvement in claims. The same pattern emerged 12 months prior. Back then it flattened out in March and moved sideways for months.Our US team continues to see GDP tracking at a meager 1.7% in the current quarter, and attributes most of the decent labour market data in recent months to unusually mild winter weather. In fact, the four-week average of initial jobless claims has now been very little changed for a month and the big improving trend from mid- September to mid-February has thus now stalled. Our initial forecast for March non-farm payrolls, due on April 6, is that job growth will moderate to +175k, down from the average +245k gains in the three prior months, with a bigger weather-related payback likely ahead in the spring.
The odd thing about the nearly identical patterns is that the winter of 2010/2011 was not as benign as this season. That suggests (to me, at least) that it may be more than just the thermometer that’s helping the numbers. It could be distortions in seasonal adjustment factors that got warped in the post-Lehman collapse. Just a thought.
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