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Anticipating The Friday Employment Report For August!

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    September 5, 2014

    The economic mover and shaker this week is Friday employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, probably the most publicized 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 of 204K new nonfarm private employment jobs from ADP, which we can consider along with yesterday’s estimate of 231K total new jobs from TrimTabs.

    The ADP 204K estimate came in below the Investing.com forecast of 220K for the ADP number.

    The Investing.com forecast for forthcoming BLS report is 225K nonfarm new jobs (the actual PAYEMS number). The Briefing.com PAYEMS consensus is 223K new jobs and their own estimate is for a higher 235K.

    Here is an excerpt from today’s ADP report:

    “August marks the fifth straight month of employment gains above 200,000, continuing an encouraging trend for the U.S. labor market,” said Carlos Rodriguez, president and chief executive officer of ADP.Mark Zandi, chief economist of Moody’s Analytics, said, “Steady as she goes in the job market. Businesses continue to hire at a solid pace. Job gains are broad based across industries and company sizes. At the current pace of job growth the economy will return to full employment by the end of 2016.”

    Here is the press release from TrimTabs:

    TrimTabs Investment Research estimates that the U.S. economy added 231,000 jobs in August, down from 271,000 jobs in July, which was the highest total in more than four years.“Employment growth topped 200,000 jobs in five of the past six months,” said David Santschi, Chief Executive Officer of TrimTabs Investment Research. “The labor market has been picking up steadily this year despite the wild swings in the government’s quarterly GDP figures.”

    TrimTabs’ employment estimates are based on analysis of daily income tax deposits to the U.S. Treasury from the paychecks of the 139 million U.S. workers subject to withholding.

    “One likely explanation for the strength of job growth this year is the expiration of emergency unemployment insurance benefits, which drew some of the unemployed into lower-wage positions by necessity,” said Santschi. “But other indicators we track suggest broader economic growth has picked up as well.”

    In a research note, TrimTabs explained that the TrimTabs Macroeconomic Index recently hit a fresh record high, real wage and salary growth remains brisk, the employment indices of the Institute for Supply Management’s Manufacturing and Non-Manufacturing Surveys are firmly in expansion territory, and unemployment claims data is positive.

    “Nothing we see in our macroeconomic indicators or in statements from Fed officials suggests the Fed will not end its bond buying in October as expected,” said Santschi. “Assuming the Fed stops printing, financial markets in general and the U.S. stock market in particular will lose a huge pillar of support.”

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

    The key difference among the three is ADP tracks private employment, TrimTabs tracks all salaried US employees, and the BLS series is for Nonfarm Payrolls.

    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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