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Anticipating Friday’s Employment Report

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    April 4, 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 March nonfarm private employment from ADP at 191K new jobs and a TrimTabs estimated range of 195K to 225K total new jobs.

    The ADP 191K estimate came slightly below theInvesting.com forecast of 195K for the ADP number.

    The Investing.com forecast for Friday’s BLS report is 200 nonfarm new jobs (the actual PAYEMS number). The Briefing.com PAYEMS consensus is 195K new jobs and their own estimate is for a lower 185K.

    Here is an excerpt from today’s ADP report:


    “The 191,000 U.S. private sector jobs added in March is slightly above the twelve-month average,” said Carlos Rodriguez, president and chief executive officer of ADP. “Hopefully, this could be a sign there is more growth to come.”
    Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is coming out from its deep winter slumber. Job gains are consistent with the pace prior to the brutal winter. The gains are broad based across industries and business size classes. Even better numbers are likely in coming months as the weather warms.”


    Here is the press release from TrimTabs:


    “Job growth last month was the strongest in the past year,” said David Santschi, Chief Executive Officer of TrimTabs. “While Wall Street economists have been obsessing about the weather, real-time tax data indicates that the economy has been picking up steam.”

    TrimTabs’ employment estimates are based on analysis of daily income tax deposits to the U.S. Treasury from the paychecks of the 136 million U.S. workers subject to withholding.

    In a research note, TrimTabs explained that it is citing a range rather than a single figure for its March estimate because the impact of bonus shifting last year and higher bonuses this year continued to skew the withholdings data.

    “Growth in withholdings was surprisingly high in March,” said Santschi. “While much of the strength was likely due to bonus effects, growth was so robust that some of it had to have been due to additional hiring. Other key indicators we track—including the TrimTabs Macroeconomic Index—also suggest the economy gained momentum in recent weeks.”

    TrimTabs reported that wage and salary income — which includes bonus payments — increased 6.3% year-over-year in real terms in March after increasing 5.8% year-over-year in real terms in February.


    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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