KEY DATA: Layoff Announcements: 60,587; Claims: -10,000

IN A NUTSHELL:  “Are layoffs up or down?  The answer seems to be yes.”

WHAT IT MEANS:  Tomorrow’s jobs numbers are important given that we had a huge rise in January and barely eked on out in February, so it is not clear where the job market stands.  Consequently, we are looking for other hints at what might be happening.  Unfortunately, the data have been all over the place and today’s numbers only add to the confusion.  First there is the Challenger, Gray and Christmas monthly layoff announcement report, which indicated that cut backs are continuing at a high pace.  In previous months, the large number of job cut notices were driven by activity one industry, such as retail, energy or industrial goods.  In March, though, the announcements were spread across a wide variety of industries. First quarter announcements were the highest since the third quarter of 2015. Restructuring, not bankruptcy is the major reason that has been given for this year’s layoff announcements, which to me points to softer economic growth.  The details in this report seem to be pointing to growing weakness in the labor market.  Keep in mind that these are announcements, not actual layoffs.

While layoff notices may be rising, actual layoffs or job losses don’t appear to be on the rise.  Weekly jobless claims fell to the lowest level since December 1969.  To put things in perspective, the labor force in December 1969 was half the size of where it is now.  That means the current level is at a historic low, when adjusted for the size of the market.MARKETS AND FED POLICY IMPLICATIONS:Well, we have surging layoff announcements and record low unemployment claims.  The two don’t seem like they should go together, but here they are.  This inconsistency is seen in many of the numbers and my explanation is that we are at a point of inflection where the overall economic trend is changing.  That would account for at least some of the volatility and contradictory nature of the data.It would also point to a slowdown not a crash.  Will tomorrow’s numbers provide some clarity?  I doubt it.  First, what is a weak number?  I am at 168,000 new jobs.  To me, that is strong, given the lack of readily available, qualified workers.  It is also large enough to keep the unemployment rate slowly trending downward, though I don’t think that happened in March.   Others, though, will be disappointed if my estimate is anywhere near what the Bureau of Labor Statistics reports, especially given that we had monthly gains in excess of 200,000 last year.  The warning, then, is that any one number really means little, as it must be viewed in context.  For payrolls, start with a three-month moving average and then compare it to what is needed to reduce the unemployment rate.  For me, that means anything in the 125,000 to 175,000 range is good.  I doubt the markets would agree with me.  That range, though, would be enough for the Fed to do nothing.