Reclaiming Common Sense

Expecting Month to Month ADP Growth in All but One Sector

Expecting October to October Growth is All but One Sector

The ADP Private Sector payroll report is released the Wednesday before the the Monthly Employment Situation Report. This Wednesday is ADP Wednesday. The seasonally adjusted data is pointing toward growth month to month and October to October in all but one sector. Could we see growth in Mining and Logging (Natural Resources) and make it ten for ten?

Month to month growth is expected in all sectors except Natural Resources. We know that the "rig count" for oil extraction have decreased during the past few months. That said, there is more to the "Natural Resources" sector, or Current Employment Statistics "Mining and Logging" sector, than just oil production. The largest growth, in percentage terms, is expected in Education and Health Services (EHS,) Leisure and Hospitality (LAH,) Construction, and Trade, Transportation, and Utilities (TTU.) A wild card is the Information Sector. Last year there was an October Spike in IT payroll. It is expected that we may see 0.14% to 0.16% month to month growth, or roughly 181,000 to 207,000 total new payroll positions. If we grow at last year's 0.19% then we could see 246,000 positions added. That is unlikely to happen.

The October to October data indicates that all sectors should grow except Natural Resources. The year over year growth has been declining since the February revisions to the ADP data. Last month we grew at just 1.66% annually. This month we could see growth between 1.60% and 1.69%. If we grow at just 1.60% then we will add 170,000 positions. If we grow at 1.63% then the number is 208,000. We could see 246,000 positions added if we grow at 1.66%. TIRE.he sectors where we are expected to see the best growth are in Construction, EHS, Professional and Business Services (PBS, LAH and Financial Services (FIRE.)

We have added nearly 1.5 million ADP Payroll positions year to date. This gives us a growth rate of 165,000 seasonally adjusted private sector payroll position per month. We were at 894,000 through April, or roughly 224,000 positions a month. It seems more than likely that we will hit roughly 175,000 positions based on the current year growth as we head into the Christmas Hiring Season.

Watch the revisions. If last month's data is revised higher by 20,000 positions then a 210,000 number this month could become 190,000. Likewise, if last month's data is revised lower by 20,000 then a181,000 number could become 201,000.

The ADP Payroll data is different from the "Employment Situation Report" data. The Employment Situation Report data is comprised of the Current Population Survey (CPS) data on jobs and unemployment, while the CES (Current Employment Statistics_ data is focused on workers and wages. Then there is the JOLTS Job Openings and labor Turnover Survey data. The JOLTS data does not delineate between full-time or part-time jobs, and therefore is most like the CES worker data. The Media loves to compare the JOLTS data with the CPS unemployment data. Different data sets have different margins of error. Each data set has different seasonal factors depending upon the month, season, or year. Comparing seasonally adjusted data from three data sets is unwise.  We might as well be comparing October data on indoor air temperature in Ojai, CA, Oconomowoc, WI, and Ocala, FL as seasonally adjusted CES worker data, ADP payroll data, and CPS unemployment data.

The data is looking good. All sectors should add payroll positions except Natural Resources. We should see a minimum of 165,000 positions added, based on the current year data. We could see 170,000 to 208,000 based on the month to month data. We could see 170,000 to 208,000 positions based on the October to October data. If we grow by more than 170,000 units then the Annual rate of growth will improve. Expect a number over 170,000. Do not be surprised if it is over 200,000.

It's the Economy.