March 30, 2016

ADP March Employment Report: 200K Private-Sector Jobs Added (With Conference Call Notes)

Filed under: Economy — Tom @ 8:00 am

This month’s version is coming out relatively early because the government’s employment report will appear on Friday.

Predictions are that 196,000 to 200,000 private-sector jobs were added in March.

The report will be accessible here at 8:15. I’ll be on the conference call and taking notes after that.

HERE IT IS (direct link):

Private-sector employment increased by 200,000 from February to March, on a seasonally adjusted basis.

From the press release:

… Payrolls for businesses with 49 or fewer employees increased by 86,000 jobs in March, up from February’s downwardly revised 68,000. Employment at companies with 50-499 employees increased by 75,000 jobs, up from February’s 60,000. Employment at large companies – those with 500 or more employees – dropped off to 39,000 which is about half of February’s 77,000. Companies with 500-999 employees added 20,000 jobs, up from 14,000 in February. Companies with over 1,000 employees fell from 63,000 jobs added in February to 18,000 this month.

… Mark Zandi, chief economist of Moody’s Analytics, said, “The job market continues on its amazing streak. The March job gain of 200,000 is consistent with average monthly job growth of the past more than four years. The only industry reducing payrolls is energy as has been the case for over a year. All indications are that the job machine will remain in high gear.”

Prior-month revisions:
- February — from 214K to 205K
- January — no change (193K; originally 205K)
- December — no change (287K; originally 257K)

CONFERENCE CALL NOTES:

Mark Zandi, Moody’s — Another month, another 200K in job growth, exactly. Roughly double the increase in working-age population. Radidly absorbing slack.

Growth strong across every sector except energy. Manufacturing is soft, esp in trade-sensitive areas. Job creation is broad-based across pay scales. Construction strong, lots of high-paid jobs. Feels like it’s on very strong ground.

Unemp insurance claims remain low. Seeing no weakening in layoffs. Job openings at record highs. Pickup in number of people quitting jobs.

As we get into full employment, wages picking up. Harder to see in BLS numbers. Employment cost index is tepid. ADP data indicates that wage growth has picked up significantly.

Everything looks good.

Growing chasm between positive jobs message and weak GDP numbers. Q116 coming in below 1 percent. Partially because productivity growth has flatlined. He’s very skeptical of GDP because of measurement issues. Still significant residual seasonality in GDP numbers, still thinks BEA is not getting it right, even after corrections a year ago. Still resid seasonality there. So Q1 will be due to measurement problems. Expects upward revisions to Q1 in later releases.

BEA is missing a lot of GDP. Clear in business investment in tehnology, significantly underestimating investment. Missing a lot of consumer spending in social media, a lot of growth there that isn’t being picked up.

Don’t pay attention to GDP, DO pay attention to jobs numbers because we can count jobs. Econ is in good shape producing a lot of jobs. No significant fallout from weak markets at beginning of year.

QUESTIONS:

ME (Pay and GDP inventory change) — Real wage growth is starting to push 2.5 percent annually, and is accelerating. ADP data (workforce vitality data) is showing strong growth. Hard not to see a meaningful pickup in wage growth. Everything is pointing to that. Only caveat is that other economies internationally (UK, Germany, Japan) are still seeing tepid wage growth, indicating that there may be other problems out there in generating wage growth.

Inventories build more than originally estimated. Should subtract from growth going forward, and it’s part of the reason why Q1 and maybe Q2 will be on the soft side. BUT … there’s a huge build in oil inventories, and maybe that’s part of the explanation why there hasn’t been a comprehensive inventory decline.

Chris Rugaber, Associated Press — Broader Q on the economy. Angst about the economy and candidates not running on the strength of the economy.

Zandi: People look at the econ through the prism of their pay, and it hasn’t been that great until recently. That’s the key in terms of perception. If wages improve, that will get reflected, but too late for the election. A year from now people will recognize that the econ is improving.

There are also regional differences. Trump fans are in perennially depressed regions of the country, e.g., poor counties in VA and other states. Big part of mfg, coal industry, etc. are struggling. People in those areas feel despair. Even in an improving economy, it will take longer for those areas to get better. They feel like Trump is listening.

Rugaber again on productivity —

Zandi: Lots of things going on, no one answer. Robert Gordon’s pessimism might be justified. Big disconnect based on where you sit and the anecdotes you’re looking at. Measurement issues are real, even though others are pushing back against it (e.g., Brookings).

Deflators were 10 percent to 15 percent in the tech sectors. Now the deflators are rising, but chip companies are focusing on battery life and versatility. Speed isn’t what matters any more. If tech deflator was the same as in previous years, that would add a few tenths of a point of GDP every year for the past decade.

10-15 years from now we’ll see a lot more in GDP than currently being reported.

Vicki Needham, The Hill — Friday BLS number

Zandi: predicts 210K. Possible decline to 4.7 in unemployment rate and decent growth in hourly earnings. You can quote me on that.

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5 Comments

  1. Okay, if we are to ignore GDP and pay attention only to jobs numbers then what percent of these new 200k jobs are full time versus part time? I smells a rat.

    Comment by dscott — March 30, 2016 @ 4:23 pm

  2. Oh, you have no idea — yet.

    Comment by Tom — March 30, 2016 @ 8:33 pm

  3. [...] late-1990s Clintoneque). On ADP’s post-report conference calls during two of the past three months, Zandi has advised those on the call, in essence: “Don’t pay attention to GDP, (but) do pay [...]

    Pingback by BizzyBlog — March 30, 2016 @ 9:54 pm

  4. [...] rate (4.9 percent to 5.0 percent). Mark Zandi of Moody’s, on the Wednesday ADP conference call, predicted that it might go as low as 4,7 [...]

    Pingback by BizzyBlog — April 1, 2016 @ 7:14 am

  5. [...] months, Moody’s Chief Economist and $2,700 Hillary Clinton campaign contributor Mark Zandi has been fond of saying that we should believe the somewhat decent job-growth numbers over the recently weak GDP growth [...]

    Pingback by BizzyBlog — April 4, 2016 @ 4:30 pm

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