On Wednesday, Econoday was singing the praises of ADP’s payroll predictions. Let’s take a look., especially in light of revisions.
Highlights
The March employment report may not prove as impressive as February or January but it still looks to be very strong, based on ADP’s 263,000 estimate for private payrolls. Details in the ADP report include a strong 49,000 gain for construction and a 30,000 increase for manufacturing. Professional & business services are another strong positive, up 57,000. This report will ease concern that heavy weather in the mid-month sample week for March may skew Friday’s report lower.
Recent History
ADP’s employment estimate not only predicted strength in both February and January payrolls but accurately predicted outlier strength.
Today’s Job Report
The change in total nonfarm payroll employment for January was revised down from +238,000 to +216,000, and the change for February was revised down from +235,000 to +219,000. With these revisions, employment gains in January and February combined were 38,000 less than previously reported. Over the past 3 months, job gains have averaged 178,000 per month.
ADP vs BLS
| Month | ADP | BLS | Miss |
|---|---|---|---|
| January | 246,000 | 216,000 | 30,000 |
| February | 298,000 | 219,000 | 79,000 |
| March | 263,000 | 98,000 | 165,000 |
| 3-month Average | 269,000 | 177,667 | 91,333 |
ADP no longer looks so glowing.
Today Econoday had this to say:
“Throw ADP out, it was the weather in March! Or at least the Category 3 storm that swept the Northeast may explain a much weaker-than-expected 98,000 increase in March nonfarm payrolls. This compares with Econoday’s consensus for 175,000 and a low estimate of 125,000” says Econoday.
“The big storm hit during the sample week of the employment report and apparently delayed new hiring, or at least that will be the takeaway from the report,” added Econoday.
Economists vs Weather
Time and time again, economists never know what the weather “was” until economic reports come out!
Mike “Mish” Shedlock
They can’t know the weather because they hide in caves and murmur their incantations over the cauldron during the day and only emerge when asked their opinions, which are mostly wrong.
The key indicator of this morning’s jobs report was the 35k job loss in the retail sector. This is likely to accelerate as the year moves along. Fitch just warned that another 8 large retailers are likely to enter bankruptcy later this year. If our economy is 70% consumer (retail trade), this is a VERY UGLY sign for the economy. I think it’s looking more and more likely the Fed will reverse it’s course of hiking rates and go back down to 0. Do you think QE5 is just around the corner Mish?
Interesting comment and I agree.
Was already working on charts for retail.
Coming up soon.
Well, there were only 31 days in March this year, so that is part of the explanation.
Careful, Yancey, you will give someone ideas. In this age of activism over anything & everything, someone will start pushing for a calendar based on the decimal system – 10 months in a year, with each month having 36.5 days! Voila, each month will start to have better figures!
Also, there were more Wednesdays than there were Tuesdays in this year’s March.
It may be useful to check in periodically with he FRED chart below :
https://fred.stlouisfed.org/series/LNS12500000
2007 employed full time = 121m
2017 employed full time = 125.5m
Delta = +3.7% in 10 years.
That data looks ominous when population growth is factored in.
Also the LFP rate below :
https://fred.stlouisfed.org/series/CIVPART.
My sense is that US households will encounter more difficult economic circumstances over the next 10 years. Too much household,corporate and government debt and too much unskilled labor capacity, especially in industries like retail, food services and hospitality.
The US consumption driven model has been sputtering throughout this tepid recovery. There is no runway left.
http://www.reginadarts.com/wp-content/uploads/2013/10/darts.jpg
Why did God invent economists? To make weather forecasters look good.
Off Topic:
Mish I assume that you were against Desert Storm back in 1991 to liberate Kuwait but that’s just a guess. Without going into a lot of details, there was a whole lot of discussion back then in the WSJ and everywhere else as to weather we had the necessary requirements for a just war. Also we had large group of allies who participated with us in the conflict, yet I don’t think we ever were able to get the approval of the United Nations. Most all Americans and people around the world were in total disbelief at all these sophisticated weapon systems we employed to take down Sadam Hussein’s republican guard and free Kuwait in 100 hours. Texas firefighters then were called in to put out the Kuwait oil well fires Iraqi troops started before they hauled ass back to Baghdad. When the bombing started the price of oil jumped up to over 60 dollars in Asia yet by the time the markets opened in New York, the news of the rout became apparent and the oil price crashed down to around 30 dollars I think I’m right with that. So if we face the same kind of circumstances ever again would you then support the use of force ?
I totally believe this trend will continue until we get negative job numbers. Not Cool!!