Bracing for a Weak Jobs Report

Did the Fed know something the markets didn't when it cut rates -- like the probability of very soft employment numbers?

Some suspect Fed Chairman Greenspan knew something we didn't when he engineered the aggressive rate cut on Jan. 3. The likelihood of a very weak payroll report, for example.

It's rather easy to make a case for severe slowdown in job growth, based on rising jobless claims, the surge in announced layoffs, and inclement weather. But interestingly, the weakness seen in the employment component of the National Association of Purchasing Managers report has historically coincided with a drop of over 50,000 in manufacturing payrolls. Given the severity of the decline in some of the other NAPM components, a decline of as much as 100K is possible. And that opens the door for a negative headline number for the Jan. 5 report.

From Standard & Poor's MMS

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