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Anticipating Friday’s Employment Report

  • Written by Syndicated Publisher No Comments Comments
    September 6, 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 the August estimate from ADP at 176K new jobs and a much lower TrimTabs estimate of 79K new jobs.

    The ADP 176K estimate came in a bit below theInvesting.com estimate of 180K, which was the same as Briefing.com’s consensus. And ADP’s number for July was revised slightly downward from 200K to 198K.

    The Investing.com estimate for Friday’s nonfarm jobs number is 180K. The Briefing.com consensus is for 177K, although its own forecast is a more optimistic 210K.

    Here is an excerpt from today’s ADP report:

     

    “The U.S. private sector added 176,000 jobs in August, as companies of all sizes expanded their payrolls over the previous month,” said Carlos A. Rodriguez, president and chief executive officer of ADP. “The August job gains are in line with the monthly average over the last 12 months.”Mark Zandi, chief economist of Moody’s Analytics, said, “It is steady as she goes in the job market. Job gains in August were consistent with increases experienced over the past two-plus years. There is little evidence that fiscal austerity and Health Care Reform have had a significant impact on the job market.”

     

    Here is the press release from TrimTabs:

     

    TrimTabs Investment Research estimates that the U.S. economy added 79,000 jobs in August, up from its estimate of 23,000 jobs in July.”Employment growth remains disappointing,” said David Santschi, Chief Executive Officer of TrimTabs. “The economy added an average of 111,000 jobs in the first eight months of this year, which does not even keep up with population growth.”In a research note, TrimTabs attributed the weakness in the labor market to higher borrowing costs in general and plummeting mortgage refinancing activity in particular.

    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 only 0.7% year-over-year in real terms in August, which is the second-lowest level this year, excluding the distortion in February due to bonus shifting.

    “Any ‘tapering’ by the Fed later this year is likely to be very modest,” said Santschi. “Not only is economic growth weak, but investors pulled a record $129 billion from bond mutual funds and exchange-traded funds from July through August.”

     

    Here is a visualization of the three series over the previous twelve months along with the ADP and TrimTabs estimates for August.

     

     

    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.

     

     

    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.

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