NFP Ex McDonalds And Birth Death Model: The USA Added 7,000 Jobs in April

05-06-2011 • ZeroHedge.com

Today's BLS of 244K is great... until you exclude the 62K from McDonalds hirings, and 175K from the Birth Death Adjustment, and end up with.... +7K jobs. And yes, the "McDonalds factor" is to be included. Per Goldman: McDonald’s Corporation said that it hired 62,000 people during an April 19 promotional event. Despite the striking number, we do not expect a major effect on nonfarm payroll employment. Last year, the industry referred to in the payroll statistics as “limited service restaurants” added 209,000 jobs during the seasonal upswing in employment from March through June in seasonally adjusted terms. Given that McDonald’s has a 17% market share of the US fast food market (as of 2009), around 35,000 of the new hires can be accounted for by seasonal variation. In addition, according to our equity analysts, US growth in the number of McDonald’s restaurants is limited. Therefore, it seems most likely that the hiring resulted from natural turnover and seasonal demand, rather than a broader business expansion. For the hiring event to have a major impact on the April employment report, a large majority of the new employees would have had to begin receiving a paycheck immediately. More likely these hires will be phased in over time. A history of Birth Death adjustments which ultimately get washed out in the annual massive downward NFP revision which nobody really ever cares about though.