Jan. 2015 ADP Employment Report: 213,000 Private-Sector Jobs Added (See Conference Call Notes)

TOPSIDE NOTE: Today’s report shows some softness, but it’s hard to evaluate when one realizes how quirky the seasonal adjustments can be in a month when over 2 million people lose or leave their jobs (ADP has said before that it can’t [i.e. won't] disclose its raw numbers). Last year, as seen here (Table B-1), unadjusted total nonfarm employment per the government’s January 2014 jobs report fell by 2.87 million, from 138.266 million in December 2013 to 135.396 million in January 2014. Private-sector employment dropped by 2.346 million, from 116.058 million to 113.712 million.

TOPSIDE NOTE 2: On the call, Mark Zandi, in response to my point that the U-6 unemployment rate does NOT pick up all unemployment and underemployment, in my view vastly overstated the number of people in the “want a job now” category who are considered to be in the U-6 calculation. It’s pretty clear from the definition (seen here at the Tables access page) that NONE of them are. He thinks some portion of the increase in that value during the past several years is in there. I don’t see it. Readers are welcome to show me why I’m wrong.

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Business Insider has a prediction of 220,000 seasonally adjusted private-sector payroll jobs added (emphasis on seasonally adjusted; January is a month when millions of workers lose or leave their jobs every year).

Bloomberg has the same number. December came in at 241,000.

The 8:15 a.m. ADP report will be here.

HERE IT IS (link to fuller report): A small miss vs. predictions —

Private-sector employment increased by 213,000 from December to January, on a seasonally adjusted basis.

Dec. was revised up to 253K. Nov. is at 274K, which I believe also represents an upward revision.

From the press release:

… Payrolls for businesses with 49 or fewer employees increased by 78,000 jobs in January, down from 115,000 in December. Employment among companies with 50-499 employees was the only segment showing an increase in January. These businesses added 95,000 jobs, up from December’s increase of 78,000. Employment at large companies – those with 500 or more employees – decreased from 61,000 the previous month to 40,000 jobs added in January. Companies with 500-999 employees added 14,000 jobs, down from December’s 23,000. Companies with over 1,000 employees added 26,000 jobs, down from December’s 39,000.

… Mark Zandi, chief economist of Moody’s Analytics, said, “Employment posted another solid gain in January, although the pace of growth is slower than in recent months. Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices, while industries benefiting from the lower prices have been slower to increase their hiring. All indications are that the job market will continue to improve in 2015.”

8:30 a.m.: Conference call notes —

Mark Zandi — Nothing much has changed. Stock market is performing well.

213K a bit soft vs. expectations, but anything 200K+ is good.

Continuing to work down slack in labor market.

Job gains were broad-based across industries, except resource sector b/c of oil price dive and info services, and company sizes.

Everything is on track, sticking to script.

Changes in macro economy:
1. oil prices.
2. sharp decline in LT interest rates.
3. surge in dollar’s value

#1 is net positive if oil gets to the $65 range and stays there. Central banks are easing rates aggressively worldwide, which is also a plus. (.5 pts to annual GDP)

#2 is also due to easing. Bank of Japan is buying all Japanese govt. debt. That will add to economic growth. If 10 yr bond averages 2.25% per year, it will add 0.25 pts to GDP. Housing should get a lift (has been flat for 12-18 months), more single-family homes, etc.

#3 has been quite substantial. Up 10%-15% against other currencies across the board. Will negatively affect growth (.5 pts FROM GDP).

Add it all up and you get +0.25 points, overall relatively modest.

Should continue to get solid reports from ADP. Economy is feeling pretty good, and I expect it to continue.

QUESTIONS:
- ME, re Gallup CEO editorial calling 5.6% unemployment rate a “lie” — LOTS of underemployment. Add it all back and there is about 1.5% slack in employment. Slack will come off in 18 months. 2 years from now labor supply and finding workers will be the problem. (remember this prediction, folks)
- WaPo reporter re small biz – no fundamental problem in small biz, which is steadily improving. Dec. and Jan. felt a bit soft. But still no fundamental change. BUT … watch what happens to small biz in the energy sector.
- third question, re info/professional services drop.
- ME, re GDP revisions — tracking estimate is down to 2.5% for 4Q14 and 2.8% for Q115.