The report is an excerpt from the Employment Charts permanent page, updated when new data is reported. Bookmark it for future reference.Originally posted July 27.
As of July 25, Federal withholding tax collections for the prior 10 business days were 3.2% greater than last year. The 10 day total is extremely volatile however, so for that reason I also look at the 4 week moving average. It is up by 6% year over year in nominal terms. This number must be adjusted for compensation inflation to derive a real rate of change.
Liquidity moves markets!Follow the money. Find the profits!
This chart compares current withholding tax collections with last year on the same date. It shows this year running well ahead of last year in nominal terms. The gap has been widening all year from zero at the beginning of the year. The April bulge was related to non compensation withholding such as mutual fund withholding for capital gains distributions.
In real terms, the year to year gain in withholding taxes has been between 2.25% and 3.75% over the past two weeks, as adjusted for the 2.2% increase in average weekly earnings reported in June by the BLS.
The BLS jobs data is based on payrolls for the week including the 12th day of the month. During that week, the real year to year increase in withholding taxes was 1.5%. To estimate the July headline payrolls number, multiplying July 2011 non farm payrolls of 131.407 million x 101.5% = 133.378 million. That would be an increase of 290,000 jobs versus the June number.
With everyone talking about how weak the economy is, that would be a big positive surprise. Will the number actually come in that strong? Given the vagaries of the jobs surveys, including the fact that the rate of change in weekly average earnings could be substantially different from last month’s 2.2%, it’s doubtful. I suspect a “beat” of some magnitude. The data will be released Friday, August 3.
These 2 charts are updated and analyzed weekly in the Professional Edition Treasury update in conjunction with their implications for employment, and in particular the Federal deficit and Treasury supply.
Stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, along with regular updates of the US housing market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Try it risk free for 30 days. Don’t miss another day. Get the research and analysis you need to understand these critical forces. Be prepared. Stay ahead of the herd. Click this link and begin your risk free trial NOW!