October ADP Employment Report (103013); 130K Private-Sector Jobs Added; Aug. and Sept. Revised Down; See Conference Call Notes
ADP’s national report will be released today as originally planned.
The government’s jobs report has been pushed back to November 8 from November 1 ostensibly as a result of the 17% government shutdown.
The report will be here at 8:15 a.m. I will be on the conference call and take notes at 8:30.
HERE IT IS (permanent link): Ruh-roh —
Private-sector employment increased by 130,000 from September to October, on a seasonally adjusted basis.
- Small businesses (1-49 employees) +37,000
- Medium businesses (50-499 employees) +13,000
- Large businesses (500 or more employees) +81,000
August has been revised down to 151,000 from an original 176,000, and September down to 145,000 from last month’s 166,000.
From the predictable press release:
Mark Zandi, chief economist of Moody’s Analytics, said, “The government shutdown and debt limit brinksmanship hurt the already softening job market in October. Average monthly growth has fallen below 150,000. Any further weakening would signal rising unemployment. The weaker job growth is evident across most industries and company sizes.”
I should also note that June and July, which started out in their original releases at 188K and 200K, respectively, are now at 190K and 161K. In general, since July subsequent revisions have been knocking down the original numbers by roughly 15 percent.
Conference Call Notes (mildly revised after listening to an audio replay at 11:15 a.m.):
MARK ZANDI’S comments:
- on the soft side. Below the roughly 150K average we’ve been getting.
- Oct. was a weak month, but job market was weakening going into Oct.
- “due to very significant fiscal austerity the economy is trying to digest (taxes and spending).
- affected by shutdown and brinksmanship over debt limit; there’s no proof positive here.
- Some direct impact from furloughs, but hard to disentanble from unemployment claims measurement issues.
- All of the slowdown was among smaller companies, particularly very small companies, but big cos. had no ill effects; consistent with impact of govt. shutdown. Big cos less likely to respond to shutdown (really? — Ed.).
- Obamacare not having much of an impact thus far.
- Softness was on the service side and not on the goods-producing side.
- Clear that job market has slowed; growth is weak.
- But I don’t think the recovery has been undermined, and we’ll see a revival of growth next year.
My Q: revisions (Why?) –
- ADP report is constructed in a similar way.
- ADP is benchmarked to BLS and is adjusted in response to BLS after revisions
- Annual benchmark rev also gets thrown in.
CNN Q: What’s going on in small biz, esp 20-50 group?
-3 potential factors: month-to-month volatility (i.e., don’t draw too much), govt. shutdown fallout causes less hiring due to increased uncertainty and nervousness, and possibly health care reform (lowest on list).
-The 20-50 impact is across all industries. He thinks of the three that the shutdown is the most important factor, but can’t prove any of it.
CNN follow-up re Fed meeting and taper:
- Expects no action or beginning of tapering; in fact, we’re moving in the wrong direction.
- Inflation is low, well below target. Core is 1%-1.5% (target is 2%), and Washington is still an issue.
- Going to be hard to assess shudown’s impact on data collection at the federal agencies.
- Conceivably might start tapering in March 2014 or even May 2014.
LA Times Q: What is projecting for jobs report —
- Zandi thinks it will be close to 100K, with govt. being weak. (Furloughed with back pays will STILL be counted as employed). Thinks timing of teacher hires dropping off (even w/ seasonal adjustment? — Ed.)
- Unemployment rate will probably rise, partially b/c of shutdown but also because furloughed employees WILL influence the Household Survey.
- Conference Board survey “are jobs available?” question deteriorated, another indicator of an unemployment rate rise.
My 2nd question on HC reform and small group plan terminations: Doesn’t know impact.