Creditwritedowns Pro readers, here is something to flag; there has been a lot of chatter amongst economic pundits about the seasonality effect on recent data. Those with a sceptical view have been saying that the upside surprise in the Friday jobs data in particular is the result of seasonal factors. Here are two examples.
- Morgan Stanley said "some of the strength in this report should be discounted because of an seasonal quirk in the courier category of payrolls (Fed-ex, UPS, etc). Jobs in this sector jumped 42,000 in December, repeating a pattern seen in 2009 and 2010. We should see a payback in next month’s report."
- According to the FT, Bank of America Merrill Lynch wrote "there was a big gain (42.2K) in “courier and messenger” hiring (UPS/FedEx). This was a seasonal increase for the holidays that will likely reverse in coming months – another reason not to expect the trend to last."
My view is that seasonality may be a factor but that the breakout is real. The housing plateau is real. The jobs improvement is real too. Jobless claims tell you that as they have been trending down for months now. Moreover, we are seeing across the board upticks: ISM, jobs, jobless claims, housing starts, etc, etc.
Bottom line: Economies don’t move in a straight line. The data are better. That doesn’t mean this will last but I do not think this is all about seasonality. I expect the first half of 2012 to be better than I anticipated six months ago but I expect this to fade by Q3.