ADP January Private-Sector Employment Report (020514): +175K Jobs Added, Dec. Revised Down, Nov. Revised Up; See Conference Call Notes
Business Insider’s email has a prediction of 185,000 private-sector jobs added.
I’ll be blogging the conference call which starts at 8:45.
Here’s the overview:
Private-sector employment increased by 175,000 from December to January, on a seasonally adjusted basis.
- Small businesses (1-49 employees) +75,000
- Medium businesses (50-499 employees) +66,000
- Large businesses (500 or more employees) +34,000
December was revised down from 238K to 227K. November was revised up sharply to 289K from 229K.
Here are the money quotes from the press release:
“The U.S. private sector added 175,000 jobs in January, which is in line with the average monthly growth throughout 2013,” said Carlos Rodriguez, president and chief executive officer of ADP.
Mark Zandi, chief economist of Moody’s Analytics, said, “Cold and stormy winter weather continued to weigh on the job numbers. Underlying job growth, abstracting from the weather, remains sturdy. Gains are broad based across industries and company sizes, the biggest exception being manufacturing, which shed jobs, but that is not expected to continue.”
CONFERENCE CALL NOTES:
(I intend to ask whether job shedding on the ground [see related government chart before seasonal adjustment here] was greater or less than last year.)
- 175K is very consistent with underlying trend abstracting from weather and data vagaries.
- 175K-200K per month trend over 3 years continues.
- BLS’s 75K in Dec. was due to “tough winter weather.”
- ADP doesn’t pick up weather effects particulary well.
- BLS does the week of the 12th each month.
- ADP does “active employees” and still counts them, e.g., ADP would count some idled construction people while BLS doesn’t.
- So in his view is a better reflection of the underlying job market than BLS, and he expects a big BLS number when weather gets better.
- BLS Dec. number “I don’t think it’s reality.”
- “I don’t think anything fundamental has changed in the economy.”
- ADP Jan. details have “some softness,” particularly in manufacturing, may reflect some weakening due to inventory buildups in second half of 2013.
- Other than that, job gains are “pretty broad-based.”
- Across company sizes, all sizes are adding to payrolls, but large co. gains which have been the strongest have gotten weaker recently, may line up with mfg. weakness.
- Over the rest of the year, we should watch labor force participation rate, which has fallen over the past few years. He expects that rate to fall (!) when workers step out of the workforce when UI benefits run out. -0.3% reducation in unemployment rate. Continued retiring of Boomers will also impact. Wage growth isn’t happening and won’t draw discouraged workers back in. Through most of 2014 at current pace of job growth.
- A guy from Accounting Today wonders about acctg. job losses (but it was seasonally adjusted!). Zandi doesn’t believe it’s real, and “can’t explain it.”
- MY Q — Doesn’t think let-gos in Jan. were out of line vs. previous years.
- Chris Rugaber from AP curious about positive construction adds. Zandi speculates that there was a possible bounceback in Jan. since Dec. weather was so awful (but so was Jan.!).
- Rugaber question 2, any chance of a breakout from 175-200K per month. Zandi expects a breakout to 225K average for all of 2014. So he expects things to pick up, with a lot of it housing-related and housing-driven industries. “Meaningfully better.”
- Steven Johnson Thomson Reuters — extrapolate to BLS. Zandi expects 170K for total NFP and 6.6% unemployment rate due to lower participation due to expired UI. Fed seems to have downgraded the importance of the 6.5% unemp. “threshold” b/c of the decline in participation.
- MY Q2 — on inventory growth and GDP, expects 2.0% GDP in Q114 and to inventory pullback to continue to weigh on Q2. Sees no evidence to argue that Q2 will be lower than 3.2%.