Wednesday’s unexpectedly weak ADP national employment survey report had some economists second-guessing their forecasts for the official jobs report which comes out on Friday.
UBS’s Maury Harris, however, has full confidence in his bullish call and he’s sticking to it.
According to ADP’s estimate, US companies added just 169,000 private payrolls in April, which was well below the 200,000 expected by economists. And for the official jobs report, which is released by the Bureau of Labour Statistics, economists estimate US companies added 230,000 nonfarm payrolls including 225,000 private payrolls.
Harris and his team of economists are pretty sure we’ll see 265,000 in the report. From his note.
Why the soft ADP estimate is not a threat to our forecast for BLS private payrolls (265k) series in the Friday jobs report?
Weather distortions affect BLS more than ADP, and we attribute 50k of increase in Friday’s payroll report to weather effects. (A parallel: in March, ADP had been 60k above BLS — we think because of weather effects.)
We allow for a boost to the official, BLS figure of 40k from the five-week gap between March and April payroll surveys. Again, this probably wasn’t a factor in the ADP figure.
In effect, we’re estimating underlying payroll growth of around 175k, with BLS figures then boosted by these two factors. Also worth remembering is that, over the last 12 months, the ADP figure has missed the official, BLS figure by an average of 45k per month without regard to sign.
We’ll cover the report live as it crosses at 8:30 a.m. ET on Friday.