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Anticipating Friday’s Employment Report

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    March 7, 2014

    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 estimate for February nonfarm private employment from ADP at 139K new jobs and a TrimTabs estimated range of 125K to 155K total new jobs.

    The ADP 139K estimate came in below theInvesting.com forecast of 160K for the ADP number.

    The Investing.com forecast for Friday’s BLS report is 150K nonfarm new jobs (the actual PAYEMS number). The Briefing.com PAYEMS consensus is 163K new jobs and their own estimate is for a slightly higher 165K.

    Here is an excerpt from today’s ADP report:


    “The U.S. private sector added 139,000 jobs in February, well below the average over the last 12 months,” said Carlos Rodriguez, president and chief executive officer of ADP.Mark Zandi, chief economist of Moody’s Analytics, said, “February was another soft month for the job market. Employment was weak across a number of industries. Bad winter weather, especially in mid-month, weighed on payrolls. Job growth is expected to improve with warmer temperatures.”


    Here is the press release from TrimTabs:


    “Job creation has basically been flat for the several months surrounding this past year-end,” said David Santschi, Chief Executive Officer of TrimTabs. “Neither real-time tax data nor key credit indicators points to the acceleration in economic growth that so many on Wall Street think is underway.”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.

    In a research note, TrimTabs explained that it is citing a range rather than a single figure for its February estimate because the impact of bonus shifting last year is skewing income tax withholdings. Many employers paid bonuses that would normally have been paid in January 2013 and February 2013 in December 2012 to avoid higher income tax rates. Some of the withholdings on bonuses paid in December 2012 were not received by the Treasury until January 2013.

    “Starting the month of March, the impact of bonus shifting will no longer be an issue so we will be able to return to a more specific monthly jobs estimate,” noted Santschi.


    Here is a visualization of the three series over the previous twelve months along with the latest ADP and TrimTabs estimates. I’ve used the top end of the TrimTabs range for this chart.



    A key difference among the three is that the ADP and the BLS series, unlike the TrimTabs data, are subject to substantial revisions. Also, as I point out in the chart above, TrimTabs tracks all salaried US employees; ADP tracks private employment, and the BLS series is for Nonfarm Payrolls.

    For a sense of the critical importance of nonfarm employment for the economy, see my Big Four Economic Indicators, which I will be updating on Friday.

    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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