Earlier today, the ADP employment survey showed that U.S. companies added just 130,000 private payrolls in October. This number, which was the lowest since May, has been trending lower in recent months.
The trend in the official BLS jobs report has been similarly weak.
“The 3-month average gain in nonfarm payrolls is now down to 143,000, the weakest pace since August 2012,” noted Goldman Sachs’ Jan Hatzius. “Other measures are even softer, with 3-month averages of 82,000 for total household employment growth and 42,000 for “payroll-consistent” household employment growth (that is, job growth estimated from the household survey adjusted to conform to the definitions of nonfarm payroll growth in the establishment survey).”
In a research note published this afternoon, Deutsche Bank’s Joe LaVorgna argues that these trends conflict with many other jobs indicators.
…What is most surprising to us is that many of the inputs used to forecast both ADP and BLS employment do not indicate the same loss of momentum as these two series have exhibited. Rather, they suggest employment should be accelerating, not decelerating.
While this list is hardly exhaustive, those indicators that have worked reasonably well in forecasting employment, at least over the intermediate forecast horizon, include the following: initial jobless claims, NFIB hiring intentions, the Manpower survey, the Conference Board’s jobs plentiful less jobs hard to get differential and manufacturing ISM employment. All of these series have shown improvement from where they were in February relative to where they stood in September. The only series not in this list that we closely follow is non-manufacturing ISM employment. It fell slightly over the aforementioned seven-month period…
This is very curious.
“Our best guess is that there may be something askew in the seasonal pattern of hiring that neither ADP nor BLS is properly capturing,” said LaVorgna. “As we have noted on numerous occasions, the year-over-year rate of increase in hiring has been uncannily steady.”
Before the Wednesday’s ADP report was released, Business Insider’s Matthew Boesler observed that the non-seasonally adjusted BLS jobs growth stats were actually trending higher whereas the seasonally adjusted one — which most people follow — has been down.
Just maybe, this will be one of those situations where numbers get revised up months down the road.
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