Economists blame a run of overly optimistic labor forecasts, including Friday's high-side miss by more than 100,000 on February jobs, in part on their enthusiasm as the US economy grows at the fastest pace in almost two decades.
"It's hope springs eternal, with everyone waking up and thinking this is the day" the labor market turns around, said Joshua Shapiro, chief US economist at New York-based MFR Inc.
PHOTO: EPA
Shapiro was one of the 65 economists in a Bloomberg News survey that led to a median forecast of 130,000 new jobs for February -- more than six times the 21,000 that the Labor Department actually reported. Forecasts overshot results, before revisions, by an average of 104,000 over the past four months.
Friday's predictions ranged from 45,000 to a high of 210,000.
"It may also be a matter of trying to force the issue by emphasizing the positive indicators," said Shapiro, whose own forecast for 100,000 job in February was below the survey's median. "It can be hard not to make spot forecasts based on your medium-term outlook." Gross domestic product will expand 4.6 percent this year, the most since 7.2 percent in 1984, according to the median forecast of 61 economists in a Bloomberg News survey taken Jan 30 to Feb. 6.
Economists including Joseph LaVorgna at Deutsche Bank Securities Inc raised estimates this week after filings for unemployment insurance fell and the Institute for Supply Management's manufacturing survey showed that more companies plan to hire. After Friday's disappointing jobs numbers, US Treasury notes had their biggest gain in two months, pushing down yields, and the dollar dropped against the euro.
The misses also show that it's difficult to make forecasts amid historic gains in productivity and unusual hesitancy among executives to hire, another economist said.
"Businesses are just a lot more cautious than they were in the past," said Sherry Cooper, chief economist at BMO Nesbitt Burns in Toronto, who had forecast a gain of 125,000. "The hiring intentions in the factory survey should be more legitimate, but we haven't sent the follow-through."
For all of last year, productivity rose 4.4 percent following a 5 percent gain in 2002, the Labor Department said in Washington. The increases in the last two years are the first to exceed 4 percent back-to-back since record-keeping began in 1947.
Productivity has outpaced economic growth for the last three years, also the longest stretch ever.
"When it comes to forecasting the monthly payrolls number, it is better to look to what employers have done, rather than what they say they intend to do," said Richard Yamarone, chief economist at Argus Research Corp. in New York, whose forecast of 45,000 jobs was the lowest in the Bloomberg survey.
The highest forecast in the survey was 210,000 by Brian Wesbury at Griffin, Kubik, Stephens & Thompson in Chicago. In an interview Thursday, Wesbury said the ISM manufacturing report weighed "front and center" in making his forecast.
Anecdotal evidence from quarterly earnings conference calls at 207 companies suggests hiring will remain weak in the first half of this year, Yamarone said.
A survey published Wednesday by the Business Council, a 150-member association of company leaders, found that while the percentage of chief executives who planned to hire rose, 45 percent said they would hold payrolls steady and 22 percent still projected declines.
Other economists, including Ian Shepherdson at High Frequency Economics Ltd. in Valhalla, New York, said they expect jobs gains to accelerate in the coming months as productivity growth slows.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique