April Payrolls Will Disappoint Neither Optimist Nor Skeptic


April’s payroll report will probably disappoint neither optimist nor skeptic.


Optimists expect another increase in jobs and not a relapse into the loss category, based on historical trends of the previous five recessions.

Pessimists, however, can point to yet another sub-par increase, suggesting that if the recovery is no longer jobless it remains joyless.

“The trend is clearly on the upswing,” says Robert Brusca of FAO Economics, who is among more bullish on the economy. “I think were going to see job growth. We’ve broken that chain [of negative numbers], but we haven’t crossed the Rubicon to job strength yet.”

Economists’ consensus forecast is for an 187,000-increase, slightly more than the 162,000 jobs created in the previous month.

March’s increase was only the second in more than two years and the first reading above 100,000 since Nov 20007, right before the recession began.

“Last month was really the turning point,” says Zach Pandl of The Nomura Group. “There are diminishing downside risks." Pandl expects a 170,000 increase in April.

That may not seem like much, but in every recovery period following the past five recessions, a positive reading of 100,00 or more jobs was never followed by a negative one. That’s true even with the two so-called jobless recoveries following the short and shallow recessions of 1991 and 2001.

In fact, declines of any sort at this point in a recovery are extremely rare.

And that’s where the pessimists stand their ground. History also shows a marked acceleration in job growth around this time after a deep recession.

In the recession-recovery periods of 1973-1975 and 1982-1983 the economy was cranking out 300,000 jobs a month shortly after payrolls turned positive.

“The question is whether there will be a delay,” adds Brusca, who revised his April forecast down from 200,000 to somewhere between 100,00-125,000 after a weaker-than expected reading on the services sector earlier this week.

That in effect is the next big hurdle and debate point.

“You just don’t see the spark that you usually see in the v-shaped recovery,” says David Jones of DMJ Advisors. “Its not a normal recovery in jobs.”

Jones doesn’t expect big job growth until the second quarter of 2011 at the earliest, citing continuing uncertainty about the business climate, from taxes to regulations.

Pandl, however, says an “eye-popping number is coming in the not-too-distant future,” adding that unusually high weekly jobless claims are over-stating the layoff situation because more people are filing claims than is usually the case. (See the latest report.)

Jones, for one, disagrees with that interpretation and dismisses much reason for optimism. “It’s a very uncertain world.”

“By now they should be able to date the end of the recession,” says Jones, referring to the , the official arbiter. "The fact that they can’t is because of the employment problem.”