A Surprise in the Job Numbers?

+ More

Will tomorrow's September payroll numbers from the Labor Department provide a big surprise? That's certainly been the case in recent years. Economists have been unable to predict with any accuracy how many jobs this economy creates on a monthly basis. Usually the pros are overly optimistic, predicting, say, 250,000 new jobs when it turns out that only half that many had been generated. This time around, economists are looking for payrolls to increase by around 120,000.

One reason for the spate of bad predictions is that job-forecasting models often use initial jobless claims as a key piece of statistical data in their soothsaying. For the week ending September 30, there were 302,000 new claims, down 17,000 from the previous week. In the past, that low a number has translated into robust payroll growth of over 200,000. But the link between the two numbers seems to be broken. Says one Wall Street economist, "It might be that when older workers retire, they are not being replaced. So you don't get any layoffs, but you don't get many new jobs either. It's theory, but I wouldn't bet the farm on it."

There is some reason, though, to think the job growth will be stronger than anticipated. Both staffing company Manpower and online job search firm MonsterWorldwide have seen their stocks surge in recent days, surpassing the results of the overall rising stock market. It's market lore that these stocks have predictive power when it comes to payrolls. And Jim Lanzalotto of the staffing firm Yoh says that September showed "stronger than anticipated ... job growth for temporary and permanent workers, especially in [information technology]."

On the downside, though, new research from consultancy Challenger, Gray & Christmas hints that employers are putting the brakes on hiring. The time it takes to find a job was up 11 percent in the third quarter, compared with the second quarter. We'll find out who's right tomorrow morning.