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MUFG strategist John Herrmann on......>

US DATA REACT
US DATA REACT: MUFG strategist John Herrmann on soft Aug +156K jobs: "as we
previewed, August typically is undercounted in the first estimate. Since the
year 1999, the BLS typically UNDER-counts Aug. payrolls by an average of
-52.277K mom."
- He adds today's jobs has "symptoms" of another "under-count" as "first,
Private payrolls gained +165K mom, very, very close to our models forecast of
+168.1K mom (and very close to consensus +170K mom)." Plus 2nd, "seasonal
adjustment factor came in very close to forecast, although the SA factors for
June-July were nudged higher." He added "third, the Aug Establishmt
Collectn-Response Rate was extremely weak, which biases lower the gain in
nonfarm payrolls. Such a downward bias to the initial payroll estimate increases
the likelihood that this payroll number is revised higher. Fourth, the weakness
in this Aug payroll report was, once again, in the public school education
sector," a sector "most at risk to be UNDER-reported in Aug and especially in an
early Sat. 12th reference wk. He urged to "NOT chase the rally" but "broad" jobs
report "tone does fit with our FLAT 2s-10s Yld Curve call."

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