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From Deutsche Bank’s Joe LaVorgna:Stop the presses – ADP points to stronger June payrolls
Commentary for Friday: As we warned in yesterday’s note, our June payroll forecast was susceptible to revision pending the results of the ADP report given the recent improvement in that series’ forecasting track record. The ADP results were much better than expected, so we are raising our payroll forecast. ADP employment rose by +157k in June following a modest downward revision (-2k) to May. Over the last four months, the average miss on ADP has been just 43k, but these misses have all been in the same direction, to the low side. Thus, if we assume a similar forecast miss, this is consistent with a 200k increase in private payrolls. With the public sector shedding on average -25k jobs per month, headline nonfarm payrolls should come in at +175k. Previously, we were forecasting +100k. Our forecast of a one tenth decline in the unemployment rate (to 9.0%) remains intact.