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Editor's Note: Below is a brief excerpt and chart from today's Early Look which was written by Hedgeye U.S. Macro Analyst Christian Drake. If you're interested in staying a step ahead of consensus, we encourage and invite you to subscribe.

  • RoC | Past Peak:   From a rate of change perspective NFP peaked in February at +2.343% YoY.  Re-breaching that growth rate to the upside is not going to happen.  It’s just math meeting realism.  The M/M change in NFP would have to be +602K for that to happen.  What does that mean?  Not much in the very immediate-term, at least based on historical precedent.  As the Chart of the Day below illustrates, payrolls run into the law of large numbers as an expansion matures with peak rate-of-change in NFP occurring ~2yrs ahead of the peak in the cycle.  Cycles take time to play out – let it breathe.  And, as noted above, typical business cycle oscillations in the post-war period are only loose analogs for the post-crisis expansion.  

CHART OF THE DAY: Payrolls Running into the Law of Large Numbers? - z chart 1 cd