July 3, 2013

June ADP Employment Report (070313): +188K Private-Sector Jobs; See Conference Call Notes

Filed under: Economy — Tom @ 8:12 am

Predictions are for an increase in private-sector employment of 160,000, per Business Insider.

The topside page at ADP with the magic number will be udpated at 8:15 a.m.

Programming note: I’m going to sit in on the ADP conference call at 8:30, so my unemployment claims post won’t go up until after 9.

UPDATE: I can’t get through to the site, but Business Insider says the number is 188,000.

HERE’S the announcement:

Private-sector employment increased by 188,000 from May to June, on a seasonally adjusted basis.

Highlights:
- Small businesses (1-49 employees) +84,000
- Medium businesses (50-499 employees) +55,000
- Large businesses (500 or more employees) +49,000

Last month was revised down by a puny 1,000 to 134,000.

Now, on to the call. If there are noteworthy comments or answers to questions, I’ll add them below.

Mark Zandi’s comments:
- Number was “solid” — guessing at 175K for overall employment pickup in Friday’s BLS report.
- reflects what’s been happening consistently for 2 years.
- Job market is “remarkbly stable” and is “encouraging” despite “fiscal headwinds” … “quite gracefully” haven’t caused the harm expected. (zheesh — Ed.)
- GDP could suggest weakening in jobs growth, but not yet.
- “Fiscal headwinds” should fade by year-end.
- Also expected weakening b/c of health care reform prep among smaller businesses, and there’s “some evidence of that” is certain sectors. But had anticipated more and it “hasn’t shown up as clearly” as originally thought. Yesterday’s one-year delay in employment mandate “augurs well.”
- He thinks the unemployment rate will drop by 0.5% during each 12-month period (June 2014 7%, June 2015 6.5%), which might signal the end of QE as Bernanke is predicting, which will cause interest rates to go up.
- Final comments — Gain are broad-based, construction jobs picked. Fingerprints of housing recovery are helpful. Vehicle sales are “back to normal” (?????–Ed.) “Today’s numbers … are quite encouraging.”

Q&A (Zandi throughout):
- There has been indication of “some slowing” in small businesses (50 employees and lower), but “not as clear” this month. HC reform is having “very modest” impact, not to the degree detractors are claiming. (He did acknowledge the possibility that those claiming job growth would have been better, but basically says, “You can’t prove that.” Still a possible “cloud” in future)
- (based on my question) Not in a position to evaluate Full-time vs. part-time job growth, it is a possibility that this is happening (move to more PT), but hrs./employee os not changing. Is looking into getting better data to break out in future reports.
- Anticipates possibility that some labor force growth increase may slow down the unemployment rate decline.
- Interest rate jumps before job market improves could pose a problem. Housing market is key to all of this working out. Fed must manage increases in LT interest rates, and can’t let them happen before job market really recovers.
- Fed tapering might start in 3-6 months, and interest rate increases shouldn’t happen for 2 years.
- (Christian Science Monitor questioner wondering why “fiscal headwinds” didn’t hurt) Zandi say surge in stock market helped offset (???? — Ed.), gave businesses a reason to “hang tough”; “surge” in house prices has also been important to consumer spending. Oil prices have been down all year, which is a big plus for all households. (on what planet? — ed.) Thinks govt. jobs data in recent months might soften after revisions. GDP is “pretty soft.” Q213 GDP growth is tracking at 1.6%-1.7%, and he’s blaming tax increases and spending cuts for that.

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2 Comments

  1. I don’t know you kept from laughing while listening to that CC. Those comments from Zandi are idiotic. It’s obvious he lives in a ivory tower fairy land. I don’t buy this HC “reform” has had a “modest” impact. From what I’ve personally seen and heard employers are cutting hours and if they have not cut workers yet in response to ObamaCare then they are seriously considering it. I also notice he takes about small businesses with 50 or less employers, but he does not talk about the small businesses they really affect growth, which are those with hundreds or thousands of employees and who are going to be the most affected by ObamaCare. And I’m with you, I have no idea what “normal” vehicle sales are, and as for oil prices, they have been consistently high all year where I live, and have dropped little if at all.

    Comment by zf — July 3, 2013 @ 1:46 pm

  2. [...] we’ve seen during the previous three quarters (assuming the second quarter comes in at about the current estimate of 1.6 percent to 1.7 [...]

    Pingback by BizzyBlog — July 7, 2013 @ 10:26 pm

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