The past two employment reports took markets on a wild ride, with 311,000 jobs created in January but only 20,000 in February. If you average the two, however, US employers have been creating about 165,000 jobs per month so far in 2019, which is close to what our model suggests is the most likely outcome for the March employment report due out on April 5: +157,000 jobs. It may sound unusual to forecast the March jobs number this early. The month is not even half over, and no consensus estimate has yet formed. Therein lies the beauty of our simple three (and a half) factor model of non-farm payroll (NFP) monthly job gains and losses: using just three market-based factors whose data isn’t even especially recent, it explains nearly 75% of the month-to-month variation in NFP – better than the consensus estimate itself.
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