Wednesday, February 1, 2012

ADP points to solid job growth

The ADP report  in January has yielded a private non-farm estimate of 170K. That estimate ranks as 25th highest ADP projection  in the last 99 months.    If we get a non farm employment number that has a similar rank over this same span of time the non-farm gains will be about  173K, making the ADP estimate for the month a very close estimate of the non-farm number of the same rank. This closeness is evidence that the distributions of gains in the ADP framework and in the non-farm private data are roughly similar even though there have been rather well-known monthly misses. 

As we look to the possibility for job growth this month we are faced with reasons to be optimistic. We have still-declining levels for weekly jobless claims, a phenomenon that points to improved jobs ahead. We also have mixed signals on the consumer as the U of M report has shown some strong improvement while the Conference Board barometer has backtracked. 

The MFG ISM has risen in the month and its employment metric has declined slightly (by one half of one point) yet it continues to give a very strong signal. 

ADP is a flawed report. It is less than perfect, but the ADP data have been correct is signalling a pick up in job growth this time around even if they have missed the mark on the point estimate. 

This month ADP report shows a discernible slowing in growth across all its size classes of firms in both goods and services  This would suggests a slowdown in non-farm private sector growth compared to last month. Since last months reading was +212K a point estimate of about 170K would be consistent with that. 

With some give back to compensate for the overshoot in the ADP last month we look for private jobs gains in the range of 130K to 150K this month.



Corportae profits are the one thing holding up the economy.


Its all about part time and temp jobs.