Reclaiming Common Sense

The March Jobs Report is created Using data collected before the 12th of the month

The ADP Report Attempts to do the same thing - Should be Before Coronavirus

The ADP Payroll report is a Private Sector Jobs Report. The Headline Government Jobs Number is created using the Current Employment Statistics Worker and Wages data. The headline number is the Non-Farm Payroll data. The NFP data includes both Private Sector and Government Sector worker data. The government "Jobs Report" also includes data from the Current Population Survey (CPS) Jobs data includes data regarding full-time and part-time jobs as well as unemployed workers. These data sets are distinctly different in sample size and what they measure. What can we expect from the March ADP Payroll data? Expect the unexpected.

The US Economy was expanding before the coronavirus (BC.) March, April, May and sometime June are great hiring months. The March ADP data was collected on, or around, the 12th of March. We did not see "stay at home" orders until after that date. The March 14th unemployment data showed some weakness. The March 21st unemployment revealed the depth of the problem. This forecast is based upon businesses expanding as they normally would have expanded.

The Month to month data is projecting month to  month gains in all sectors. The big question mark here is in the Natural Resources (M/L) sector. We were in the process of converting from Winter to Summer blend. We were also in the process of seeing lower than normal prices at the pump. The M/L sector is the smallest sector. If there was a contraction it will not impact the rest of the growth. The main sectors for growth are Construction, Manufacturing, Financial Services (FIRE,) Education and Health Services (EHS,) and Information Services (IT.) The month to month growth is expected in the 0.13% to 0.18% range, leaning towards the 0.13% to 0.16% range. We grew at 0.13% last March and 0.15% during March of 2018. A rate of 0.13% would yield 168,000 private sector payroll positions. If we grew at 0.18% then it could reach 233,000. We added 218,000 to 296,000 payroll positions during the month of March between 2011 and 2016, according to the most recent revisions. We added 104,000 to 183,000 during March of 2017, 2018, and 2019. The month to month data indicates a range of roughly 180,000 to 220,000, or roughly 200,000. This would be the "best" March under President Trump.

The March to March data indicates that the economy was slowly increasing its rate of expansion.We have been growing between 1.42% and 1.48%. Last February we were growing at 1.53%, and last March we grew at 1.51%. The top growing sectors March to March were expected to be Construction, M/L, EHS, FIRE, Manufacturing, and Professional Business Services (PBS.) Once again, there is a question as to whether or not M/L will grow March to March. If we were to grow at a slower rate, roughly 1.46%, then we could expect only 143,000 positions added. This was not likely. If we grew at 1.53% then we could see a number as high as 232,000 payroll positions added during March. We grew at 1.48% last month. If we grew at that same rate then we would see 168,000 position added this month. It was more likely that we would return to 1.49% (181,000) or 1.51% (207,000) or 1.53% (233,000.) This is in good agreement with the month to month data. This data pushes the range more to the 205,000 to 210,000 range.

Do we have to watch the revisions this month? Probably. If the monthly data is revised upward from last month's level of 183,000, to something more in line with last month's private sector CES (228,000) then that would borrow 45,000 position from this month's ADP.  A "233,000" number would suddenly become a 188,000 number.

Did the Consecutive Months Streak end with the release of the 2020 revisions? Originally the September 2017 number was 97,000 positions added. That was revised to 84,000 after the 2018 revisions, and 111.000 after the 2019 revisions. Now, with the 2020 revisions the monthly number for September 2017 is a negative 39,000 positions.  

This data is indicative of where we were heading right before the Wuhan Flu, Chinese Coronavirus, or COVID-19, changed everything. The data for 2018 and 2019 were revised lower with the release of the February ADP report, after the January revisions to the CES Worker data. If we can resolve this issue before April 12th then we might see "normal" numbers released this April. If we cannot resolve it, then the 119 month ADP streak may come to an end. This was a government created shutdown/slowdown. It will be a government reboot and expansion. Will it be during April or May?

It's the Economy.