Jack Dunn - Reclaiming Common Sense

The monthly Employment Situation Report is preceded by the release of the monthly ADP Payroll Report. The Employment situation report is created through the use of two data sets - the Current Population Survey (CPS)  which measures full-time jobs, part-time jobs, unemployed workers, and the workforce population, and the Current Employment Statistics (CES) which measures workers. Each of these data sets has a seasonally adjusted (SA) and a non-seasonally adjusted (NSA) component. The ADP report only provides SA data.The data sets are of different sizes. These factors make a forecast column difficult. Here is what the data indicates.

Expect an ADP Number of  between of greater than 250,000 jobs added. We should see an annual growth rate of 2 to 2.1% and a monthly growth rate of 0.20%. If this happens then the total number should be 124.6 million jobs - a gain of 275,000 to 293,000 jobs.

We should see strong growth in Construction, Mining and Logging (Natural Resource Management,)  Education, Finance and "Other."  Mining an logging could approach 700,000 jobs. Construction may exceed 7 million jobs. Finance may exceed 8.45 million jobs. Education may jump by 2% to 2.5% from last year's level to potentially exceed 16 million jobs. Finance could approach 8.45 million to 8.5 Million jobs. Leisure has been one of the strongest sector. It should grow roughly 0.25% month to month and 3.00% July to July. This would place us at 23.1 million to 23.2 million workers. In short, we should anticipate month to month and year to year seasonally adjusted worker growth in every ADP sector except Information Technology.

The industry that is still flat or declining is Information Technology. IT may grow month to month and drop year over year.Using month to month growth we cold add 4,000 jobs. Using Annual Growth rate we could see a loss of 8,000 jobs from the level reported last month.

Using annual and monthly growth rates tightens the window of possibility for job growth. This should be a "surprisingly good" report. The seasonally adjusted data masks real changes from month to month - it is better for annual growth. The forecast of 275,000 jobs compares well with the forecast for the Employment Situation report posted here yesterday.  It was projected here that the SA CES data could see a growth of 250,000-300,000 workers, depending upon the adjustments to last month's data, the growth rate from month to month, and the seasonal factors used.