THE 'JOBS REPORT' WAS WEAK

AdpADPSome historical context

According to ADP,
U.S. companies added 166,000 private payrollsin September.

This was a bit weaker than the 180,000 jobs expected by economists.

Even worse, the August number was revised down to 159,000 from an earlier estimate of 176,000.

“At face value, the ADP report suggests the Fed was right to delay the tapering of its monthly asset purchases last month,” said Capital Economics’ Paul Ashworth. “But most of the other recent evidence on the labour market has been more upbeat. Initial jobless claims are still close to 300,000 and yesterday we learned that the ISM manufacturing employment index strengthened further in September. There is now clearly more downside risk to our above consensus forecast that non-farm payrolls increased by 220,000 last month. But given the ADP survey’s patchy record, particularly based on the initial estimates, we’re not ready to revise that non-farm payrolls forecast down.”

Here’s a breakdown by size:

  • Small businesses (1-49 employees) +74,000
  • Medium businesses (50-499 employees) +28,000
  • Large businesses (500 or more employees) +64,000
  • Small businesses (1-49 employees) +74,000
  • Medium businesses (50-499 employees) +28,000
  • Large businesses (500 or more employees) +64,000

– See more at: http://www.adpemploymentreport.com/2013/September/NER/NER-September-2013.aspx#sthash.SDmtbM3P.dpuf

  • Small businesses (1-49 employees) +74,000
  • Medium businesses (50-499 employees) +28,000
  • Large businesses (500 or more employees) +64,000

– See more at: http://www.adpemploymentreport.com/2013/September/NER/NER-September-2013.aspx#sthash.SDmtbM3P.dpuf

  • Small businesses (1-49 employees) +74,000
  • Medium businesses (50-499 employees) +28,000
  • Large businesses (500 or more employees) +64,000

– See more at: http://www.adpemploymentreport.com/2013/September/NER/NER-September-2013.aspx#sthash.SDmtbM3P.dpuf
Here’s a breakdown by industry:

  • Construction 16,000
  • Manufacturing 1,000
  • Trade/transportation/utilities 54,000
  • Financial activities -4,000
  • Professional/business services 27,000

At this point, thanks to the government shutdown the Bureau of Labour Statistics will not be publishing the official jobs report on Friday. As such, the economy-watching world will be focused on the ADP’s alternative.

This chart from ADP shows just how good it really is as a proxy:

“[T]here has been a growing case for the ADP report to get more attention than it did in the past; its reliability seems to have improved since Moody’s replaced Macroeconomic Advisers as the compiler of the data late last year,” said High Frequency Economics’ Jim O’Sullivan. “ADP’s misses have averaged 38K — without regard to sign — in the 11 months since Moody’s took over, down from 63K in the previous 11 months. Of course, that is just an average. Misses have ranged from -63K — with payrolls weaker than ADP — to +57K — with payrolls stronger than ADP. Last month’s miss was -24K, with the ADP series up 176K and private payrolls in the BLS report up 152K; total payrolls rose 169K.”

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