Winter Is Coming, But Not Quite Yet; LinkUp Forecasting Strong Job Growth In April

We've jettisoned our antiquated, overly-simplistic non-farm payroll forecast model for a more sophisticated, vastly improved model built by GlobalData's quant team

We published our first non-farm payroll (NFP) forecast in 2009 coming out of the Financial Crisis and have been doing so every month ever since. The forecasting model we developed was a pretty simple one based on the monthly percentage change in new and total monthly job openings in the U.S. posted directly on company websites around the world. Despite the simplicity, however, the model performed quite well over the years due to both the quality of our data as well as the forward-looking nature of our data (i.e., job openings are a very strong signal of a future hire).

In fact, after being invited to participate in Bloomberg’s monthly survey of economists (we were the first non-financial institution to be included in the monthly survey), there were a number of years where we were the top performing NFP forecaster of the ~100 or so survey participants.

But in the past few years, the model has started to break down and our tracking error has increased dramatically, even as we accelerated our coverage expansion in the U.S. and especially around the world.

We’ve long maintained (but perpetually neglected) a list of improvements we wanted to make to the model and in the Covid era, that list became absurdly long. And so finally, this year, the neglect caught up to us and our forecasting performance has been abysmal.

Fortunately, however, we are now part of GlobalData and the quant team has built a far more sophisticated, vastly improved non-farm payroll forecasting model. If anyone wants a copy of the report on our NFP forecast model, please send an email to sales@linkup.com.

The new forecasting model is still based on the time series of LinkUp job openings data that runs from the 20th of the prior month to the 19th of the current month. Between the 20th of March and the 19th of April, U.S. job openings sourced directly from company and employer websites around the world rose 5% and new jobs jumped 17%.

Based on that data and using the new forecast model, we are forecasting a net gain of 211,000 jobs in April, well above the consensus estimates of 130,000 jobs.

Running the model since the beginning of 2023, the forecasts from the new model are as follows:

We will publish our monthly calendar data along with some commentary on the U.S. job market in the next few days.