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Anticipating Friday’s Employment Report

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    June 6, 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 April nonfarm private employment from ADP at 179K new jobs and aTrimTabs estimate of 229K total new jobs.

    The ADP 179K estimate came in well below theInvesting.com forecast of 210K for the ADP number, and the previous month was revised downward from 220K to 215K.

    The Investing.com forecast for Friday’s BLS report is 218 nonfarm new jobs (the actual PAYEMS number). The Briefing.com PAYEMS consensus is 220K new jobs and their own estimate is for a higher 235K.

    Here is an excerpt from today’s ADP report:


    “After a strong post-winter rebound in April, job growth in May slowed somewhat,” said Carlos Rodriguez, president and chief executive officer of ADP. “The 179,000 jobs added figure is higher than May of last year and in line with the average over the past twelve months.”Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth moderated in May. The slowing in growth was concentrated in Professional/Business Services and companies with 50- 999 employees. The job market has yet to break out from the pace of growth that has prevailed over the last three years.”


    Here is the press release from TrimTabs:


    “The labor market has been gradually improving early this year,” said David Santschi, Chief Executive Officer of TrimTabs Investment Research. “Employment growth has exceeded 200,000 jobs for three consecutive months for the first time since the spring of 2011.”TrimTabs’ employment estimates are based on analysis of daily income tax deposits to the U.S. Treasury from the paychecks of the 138 million U.S. workers subject to withholding.“Investors should be more concerned about inflation than growth right now,” said Santschi. “The consumer price index rose 2.0% year-over-year in April, the biggest increase since July 2013, and consumer price inflation is likely to accelerate further. Not only did commodity prices spike earlier this year, but central banks around the world are remaining extraordinarily accommodative.”
    In a research note, TrimTabs reported that wage and salary income increased 3.2% year-over-year in real terms in May, little changed from 3.4% year-over-year in April.


    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, ADP tracks private employment, TrimTabs tracks all salaried US employees, 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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