Reclaiming Common Sense

The March ADP jobs report was released this morning at 8:15 am. This was a strong report. There were some downward revisions to the February Numbers. This column projected a strong number in the article "What to expect from ADP This Week." It was thought that we could see a monthly growth rate of 0.18% to 0.20% and that we could then see an annual growth rate of between 1.90% to 2.10%. So what happened?

The Data for February was revised down by 47,000 Seasonally Adjusted Private Sector Workers.  The January NFP ADP number is now  249,000 and February now stands at 245,000. The January data was revised up by 7.000 jobs for January and down 47,000 jobs for February. More jobs were added during March of 2017 than during June of 2016.

We Saw Monthly growth of 0.21% and an annual growth of 1.87% during March. The Monthly growth for January and February were 0.22% and 0.20% respectively. The annual rates for January and February were 1.86% and 1.85%, respectively. If we compare this to May of 2016  when we grew at 0.05% monthly and 1.92% annually, or October 2016, when we grew at 0.05% monthly and 1.82% annually, we appear to be on the right track. from last months

The January revisions were mostly upward in nature. We saw the Construction, Manufacturing, Professional and Business Services sectors revised higher than where they were last month. Mining, Education and Health, Leisure and Hospitality, and the Transportation sector were revised down from last month's preliminary data.

The February Revisions were mostly up. We saw upward revisions to the Construction, Mining, Manufacturing, and Education/Health sectors. We saw downward revisions to the Transportation and Leisure  sectors, again, as well as a downward revision to the Professional and Business Sector. The February revisions were cumulatively negative mostly due to a drop in the Trade, Transportation and Utility Sector.

We saw Month to Month Growth in nine of ten sectors. The only sector where the seasonally adjusted data declined was in Information Technology. The strongest seasonal growth was observed in Construction (0.72%,) Natural Resources/Mining (0.54%) and the Financial Sector (0.30%.)

We saw Annual Growth in eight out of ten sectors. The strongest growth was in the Construction sector, the Professional and Business Services sector, and the Education/Health Sector. WE saw annual declines in the IT sector and the Mining Sector. This comes as no surprise when you consider that these two sectors are in the same group where we have seen Current Population Survey (CPS) declines: Manufacturing, Mining, Construction, IT, Financial services.. There is no Government data in the ADP report because they monitor Non-Farm Private Sector data.

This column produced an article that projected strong CES growth, non-seasonally adjusted, as well as strong CPS Full-time Jobs growth, non-seasonally adjusted.  That article "Mad March Jobs Forecast," also projected a decline in unemployment and a boost to the NSA participation rate.The growth rate projected for the CES number does not compare with the ADP number because the value quoted in the forecast column is a NSA data and the ADP number is a SA value. It also does not compare because the two sample sizes are different. The SA MTM growth rate was better than March 2011, 2013-2016. The annual rate is slower than 2015, and 2016, which doesn't make sense, other than the economy was stalling during the Summer of 2016 and is pulling out of the stall now.

In theory, the ADP Number could be paving the way for an even higher private sector number, 284,000 jobs or higher. It will depend on the CES growth rate and the CES seasonal factor used to convert the NSA data to the reported SA value. The seasonal factors have been sliding lower during recent years. Will it set a "record low" for the month of March since March 1980? We will know on Friday.

It's the economy.