The ADP Month to Month data indicates growth in all Sectors
The ADP December to December data indicates growth in all Sectors
Last month the ADP Payroll report surprised to the low side while the November Employment surprised to the upside, both in revisions and raw numbers. The seasonal factor skewed the CES data lower than it could have been reported. Will the ADP data be revised higher this month? What sectors will see the best growth?
Month to Month growth is expected in all sectors. The largest growth is expected in Construction (0.40%-0.70%,) Professional Business Services (PBS,) Education and Health Services (EHS) and Leisure and Hospitality (LAH,) all rising 0.15% to 0.30%, and Trade, Transportation and Utilities (TTU,) Information (IT,) and Financial Services (FIRE,) which are expected top grow 0.10% to 0.15% month to month. The only question mark is a big pop or drop in Natural Resources (M/L.) The combined growth is expected to be in the 0.08% to 0.14% range, or 104,000 to 181,000 payroll positions.
December to December growth is expected in all sectors. The largest growth sectors are expected to be Construction (4.00-5.00%,) PBS, EHS, and LAH (2.00-3.00%,) TTU and FIRE (1.00-2.00%) and IT (up to 1.00%.) Natural resources are expected to grow by anywhere between 2% to 8%. The overall growth rate has been declining since August. Last month we were at 1.50%. If we slow and hit 1.45% then we could hit 189,000 positions. If we maintain the 1.50% rate then we hit 253,000 workers. If we come closer to the October growth rate and hit hit 1.55% then we could see 317,000 positions added during December.
What's up with the Annual creation? We were adding 188,000 positions per month through May. Last month that average dropped to 155,000. We are following a similar creation pattern to that of 2006. We added roughly 170,000 seasonally adjusted positions at that time.
Follow the bouncing ball. We would need to grow at the same month to month rate as we did last December to hit 253,000 positions added. If we grow at 0.20% month to month then a annual growth rate could come in at 1.50%. The month to month data has been growing and dropping in fits and starts. The data has been "begging for a bounce" since this Summer. A month to month of 0.20% in not outside the realm of possibility. We have had a 0.15% during December of 2003 and 2013. We have had a growth rate of 0.18% during December 2011, 0.19% during December 2017, and 0.20% last December. The ADP data can be found here.
Watch the revisions. last month the ADP payroll number was a seasonally adjusted 67,000 private sector payroll positions were added. This compares poorly with the 504,000 non-seasonally adjusted private sector workers added during November. It compares poorly to the 254,000 seasonally adjusted private sector workers added, too. Imagine what happens to the December ADP number if the November data, or the October and November data are revised higher by 50,000 positions, 100,000 positions, or 150,000 payroll positions. If the prior data is revised higher by 100,000 positions, between October an November, then that "borrows" 100,000 from December, reducing a possible middling 189,000 to 89,000.
Different data sets - Different Results. The media obsesses over the ADP number and the Employment Situation number. The ADP Private Sector Payroll data is very different from the headline non-farm payroll (NFP) number because the CES NFP includes changes in government workers. The Employment situation report is created using the Current Population Survey (CPS) data on jobs and unemployment as well as the CES data on wages and workers. These three data sets, ADP, CES, and CPS, have different sample sizes and different margins of error. The ADP Private Sector data rarely aligns with the CES private sector data. The seasonal factors used to create the seasonally adjusted CES data change by sector, month, and year. Seasonally adjusted ADP worker growth peaked during August. November was a huge month for the CES data where over 250,000 private sector workers were added. . This could not be said regarding the paltry 67,000 payroll growth according to ADP.
The media may be anticipating 150,000 ADP payroll positions added this month. This would coincide with a month to month growth rate of roughly 0.12% and an annual growth rate of roughly 1.42%. This seem low.Expect a number around 189,000 pre-revisions. The projected growth in TTU, EHS, and LAH make sense. Manufacturing should also tick higher from last month's level. the month to month growth in Mining and Logging (Natural Resources) is the main sector that is in question. IT has been showing a resurgence lately. This month may be a monster number to compensate for last months trick when we received an Employment Situation Treat. Expect a bounce in the ADP number for November. Expect this to pull down the December number a little.A number around 189,000 would be good. Do not be surprised if the ADP number is more like the November CES data and blows through 250,000.
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