Reclaiming Common Sense

May Fourth is the unofficial, or possibly official, "Star Wars Day." May the Fourth be with you. If you are an Episcopalian, it may be reflexive to say "And may it also be with you." The Force is strong with this economy. This week we received strong payroll data from the ADP Payroll Report, Solid Weekly Unemployment Claims data, and remarkable "Jobs" data with the release of the April Employment Situation Report. This would not have been a surprise if you had read the ADP and Employment Situation Forecast Articles.

(April 29)  The week started with the April ADP Payroll Report Forecast article.  "April ADP Bounce Probable" was an attempt to downplay how good the report was expected to be. It was thought that we would see payroll growth in all sectors April to April and month to month. Growth in Information Technology was not certain for April to April. The month to month data was indicating possible weakness (180,000 to 231,000) while the annual data was projecting potential strength (200,000 to 245,000 with a top of 285,000) The overlap was in the 205,000 to 231,000 range with potential revision of 30,000 positions lowering that projection.

(April 30) The Employment Situation Forecast was in pretty close agreement with the ADP forecast. "April Jobs Report Should Fire on All Cylinders" projected strong month to month gains and solid annual growth. The concern was that we might not quite see the annual growth that we saw during the final months of 2018.  It was thought that we could see a value of 272,000 seasonally adjusted private sector workers added before upward revisions to the February and March data.

(May 1) Hooray, Hooray the First of May. "April ADP Reveals Spike in Payroll" reported that while there were modest declines in Natural Resources Payroll and IT Payroll there was strength elsewhere. The headline number was 275,000 payroll positions added during April. There were 23,000 positions added to February's 197,000 to boost that number to 220,000 positions. March was revised up by another 22,000 positions. This means that in addition to the official 275,000 that there were another 45,000 positions added with the release of the report. The headline number could have been 320,000.

(May 2) The weekly unemployment claims data is the most unloved report in the media. It used to be headline news if the seasonally adjusted (SA) first-time (FTU) claims data came in under 300,000 claims. That is so four years ago. We had 204,035 non-seasonally adjusted (NSA) first-time claims and 230,000 SA FTU. The continuing claims (CC) data has been under 2 million SA CC for more than two years. This week the NSA CC was 1.647M and the SA CC was 1.671M. The percentage of covered insured receiving continuing claims dropped to 1.15%. "April 27 First-time Claims Remain Strong" goes into more details.

(May 3) Someone, somewhere, gets paid a considerable amount of money to saw that the economy is going to "add 180,000 jobs and that unemployment will remain steady at 3.8%" month in and month out. There is rarely any mention that the "jobs" number is actually the Current Employment Statistics (CES) worker data and the unemployment data comes from the Current Population Survey (CPS) jobs and unemployment data." This year has been the :Tale of Two Data Sets" with regard to the jobs and workers data. This month was no different. "April Jobs Report: What On-coming Storm" reported that we saw month to month growth in all sectors except mining and Logging. It also reported that we saw annual growth April to April in all sectors except IT. The surge in CES workers was not reflected in the Jobs data from the CPS data set. We had a very strong non-seasonally adjusted (NSA) CES worker number, growing by 1.126 million non-farm payroll (NFP) positions. This was reported as an increase of 263,000 seasonally adjusted (SA) NFP and 236,000 private sector jobs. There was an upward revision to the February NSA data of 10,000 private sector jobs, total jobs. This also boost the March data by 9,000 Private sector workers, net-net 245,000 private sector positions were added during April.

This week was a good week for the economic data. Payroll positions jumped higher, unemployment claims fell, and the Government Job Report reflected strength in the economy. The jobs data will be examined more next week. One thing to remember is that when the April JOLTS Job Openings and Labor Turnover Survey data is released is that the JOLTS data compares with the CES worker data and not the CPS unemployment data.  We will probably see the most quits, separations, job openings and hires in the Education and Health Services sector, the Professional Business Services Sector, the Leisure and Hospitality Sector, and the Trade, transportation and Utility Sector. Their order will change between categories.

It's the Economy.