September ADP Employment Private-Sector Employment Report: +166K, Prior Months Revised Down (See Conference Call Notes)

The report will come out at 8:15 a.m. The montly conference call will take place at 9:30 a.m.

Business Insider is carrying a prediction of 180,000 private-sector job additions.

HERE IT IS (permanent link):

Private-sector employment increased by 166,000 from August to September, on a seasonally adjusted basis.

Highlights:
- Small businesses (1-49 employees) +74,000
- Medium businesses (50-499 employees) +28,000
- Large businesses (500 or more employees) +64,000

I wouldn’t call this a huge miss, but it is of course a miss in the wrong direction.

But there’s more, as seen in the graph at the link. August was written down from 176,000 to 159,000 and July has gone from an original 200K two months ago (Update: and 198K one month ago) to 161K.

Here’s more, from the press release, which includes Mark Zandi’s annoying obsession with “austerity”:

During the month of September, the U.S. private sector added a total of 166,000 jobs,” said Carlos A. Rodriguez, president and chief executive officer of ADP.

“As in previous months, most of the job gains occurred in the service-providing sector.”

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market appears to have softened in recent months. Fiscal austerity has begun to take a toll on job creation. The run-up in interest rates may also be doing some damage to jobs in the financial services industry. While job growth has slowed, there remains a general resilience in the market. Job creation continues to be consistent with a slowly declining unemployment rate.”

I’ll be taking conference call notes at 9:30 a.m. Questions I’m going to try to get in:

• What, if anything, have you learned about the percentage of these jobs which are part-time in nature?
• Given a recent survey which reported that the Affordable Care Act is affecting small business hiring (according to Gallup, “41 percent indicated that they “have held off on plans to hire new employees,” and 38 percent “have pulled back on plans to grow their business” because of Obamacare”), why do you still believe (asssuming he still does, which is likely — Ed.) that the Act is not affecting employment or employers’ decisions to hire part-timers instead of full-timers?
• What is total private-sector employment according to ADP’s data? (Seasonally adjusted private-sector employment per the government was 114,302,000 in August.)
• (If not addressed) What’s with the big prior-month revisions?

Other question suggestions are welcome, though I’m going to have trouble getting them in, since I will probably only get one chance to speak.

++++++++++++++++++++++++++++

Conference Call Notes:

Mark Zandi: The gain in Sept. was consistent with job growth over past 3, 6, 12 months and past three years. Right in that range.

Gains have been on the soft side in the past few months, consistent with BLS.

Fairly broad-based across industries. Financial services decline last month, probably due to higher interest rates.

Mfg. is still soft. (Then how is ISM so high? — Ed.)

Job growth across company size — no appreciable change. Small cos adding consistently.

Hasn’t seen significant effects of health care reform on the job market. Hard-pressed to see significant effect even on part-timers, but script is still being written. Acknowledges possibility that it would be better without health care reform.

Slowing in past few mos. is probably more related to fiscal austerity and government spending cuts. Can’t draw direct line, but that’s his sense. GDP flatness more traceable to that.

3Q GDP is heading towards 1% – 1.5%.

Shutdown won’t impact ADP report unless it extends to mid-Oct.

Q&A:

Effect on Fed tapering — 150K in jobs adds is not consistent with tapering. Needs to be closer to 200K. Shutdown damage won’t be much if settled by middle of next week. Thinks unemp rate will be lower on Fri. (7.2%).

How long for shutdown impact (asked and answered). It will start to unnerve stock and bond investors in mid-Oct. and might show up in data for a month or two, esp if it goes to Oct. 19 or 20. Q4 will feel like economy is stalling out. (Like it’s not already???? — Ed.)

Zandi sidebar — trying to gauge effect of political uncertainty on the economy (brinksmanship and policy). It has had a significant impact. If it were where it was before the recession, GDP would be about $150 billion greater (about 0.9%), or 1.1 million jobs, with unemp rate 0.7% higher than it would have been (i.e., would be 6.6% instead). Corrosive over years.

Thinks an agreement won’t happen until the market panics. (until “lawmakers get it together”) (just “lawmakers”? — Ed.)

ME:

• BLS-ADP are the same; ADP doesn’t publish total private-sector employment.
• Downward revisions — better data. Not certain if downward revisions constitute a pattern.
• Gallup poll (see above) — not seeing impact of sentiments expressed in data yet.

Q on “Pandora’s box” if debt limit stalemate goes past Oct. 17 — If SocSec checks delayed, big impact. Treasury will continue to make payments on debt, but investors will wonder for how long with pressures to pay Grandma. Confidence will weaken very rapidly. Fed is already at it’s wits’ end, and it will be a mess. Would lead to a deep recession. No policymaker will go down that path.

Q on jobs report not coming out on Friday — Does that in and of itself cause a bad day in the market? A: report if issued might provide some solace, but not really meaningful.