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Friday Jobs Report: Stunner From TrimTabs

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    August 1, 2013

    The most important economic news this week is Friday’s employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, probably the most significant in the near term being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository).

    Today we have a July estimate from ADP at 200K new jobs and a shockingly low TrimTabs estimate of 23K new jobs.

    The ADP 200K estimate came in above theInvesting.com estimate of 180K, and Briefing.com was looking for 175K. And ADP’s number for June was revised upward to 198K from 188K.

    Here is the press release from TrimTabs on today’s stunner:


    TrimTabs Investment Research estimates that the U.S. economy added 23,000 jobs in July, down sharply from 135,000 jobs in May and 182,000 jobs in June. “Job growth this month was the slowest since September 2010 when the U.S. lost 65,000 jobs,” said David Santschi, Chief Executive Officer of TrimTabs. “The surge in mortgage rates seems to be hitting the economy hard.”In a research note, TrimTabs attributed the weakness in the labor market mostly to higher borrowing costs as well as looming Obamacare mandates and slowing growth in emerging economies.

    TrimTabs’ employment estimates are based on an analysis of daily income tax deposits to the U.S. Treasury from all salaried U.S. employees. They are historically more accurate than the initial estimates from the Bureau of Labor Statistics.

    TrimTabs also reported that wages and salaries increased a scant 0.4% year-over-year in real terms in July, the lowest growth of the year. This level of growth is consistent with an economy that is close to stalling.

    “The economy is much weaker than most investors realize,” said Santschi. “Most Wall Street economists expect the Fed to scale back the pace of money printing in September, but I suspect any changes will be very modest because the economy is so fragile.”


    Here is a visualization of the three series over the past twelve months, ending with the ADP and TrimTabs estimates for June.



    A key difference among the three is that the ADP and the BLS series are subject to substantial revision. Here, for example is an illustration of the ADP revisions from January of last year through March of this year.



    The Investing.com estimate for Friday’s nonfarm jobs number is 184K. Briefing.com is looking for a smaller 175K.

    For a sense of the critical importance of nonfarm employment for the economy, see my Big Four Economic Indicators, which I’ll be updating on Friday after the latest BLS employment report is published.

    Images: Flickr (licence attribution)

    About The Author

    My original dshort.com website was launched in February 2005 using a domain name based on my real name, Doug Short. I’m a formerly retired first wave boomer with a Ph.D. in English from Duke. Now my website has been acquired byAdvisor Perspectives, where I have been appointed the Vice President of Research.

    My first career was a faculty position at North Carolina State University, where I achieved the rank of Full Professor in 1983. During the early ’80s I got hooked on academic uses of microcomputers for research and instruction. In 1983, I co-directed the Sixth International Conference on Computers and the Humanities. An IBM executive who attended the conference made me a job offer I couldn’t refuse.

    Thus began my new career as a Higher Education Consultant for IBM — an ambassador for Information Technology to major universities around the country. After 12 years with Big Blue, I grew tired of the constant travel and left for a series of IT management positions in the Research Triangle area of North Carolina. I concluded my IT career managing the group responsible for email and research databases at GlaxoSmithKline until my retirement in 2006.

    Contrary to what many visitors assume based on my last name, I’m not a bearish short seller. It’s true that some of my content has been a bit pessimistic in recent years. But I believe this is a result of economic realities and not a personal bias. For the record, my efforts to educate others about bear markets date from November 2007, as this Motley Fool article attests.