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117 matches for " payrolls":

2 June 2017 May Payrolls Likely Solid, but Calendar Quirk will hit Wage Data (My Publications)

The 253K increase in May private payrolls reported by ADP yesterday was some a bit stronger than our 225K forecast. Plugging the difference between these numbers into our payroll model generates our 210K forecast for today's official number.

8 July. 2016 June Payrolls Should be Better than May, but no Return to Trend Yet (My Publications)

We have had a modest rethink of our June payroll forecast and have nudged up our number to 150K, still below the 180K consensus. Our forecast has changed because we have re-estimated some of our models, not because of the 172K increase in the ADP measure of private payrolls. ADP is a model-based estimate, not a reliable survey indicator.

2 Oct. 2015 Expect Decent September Payrolls, But Sluggish Wage Gains (My Publications)

Whatever you think is the underlying tr end in payroll growth, you probably should expect a modest undershoot in today's report, thanks to the persistent tendency for the first estimate of September payrolls to undershoot and then be revised higher. The good news is that the initial September error tends not to be as big as in August--the median revision from the first estimate to the third over the past six years has been 49K, compared to 66K--and it has declined recently. Over the past three years, September revisions have ranged from only 18K to 27K. Still, we can't ignore six straight years of initial undershoots.

10 March 2017 February Payrolls Look set for Strength, Seasonals Permitting (My Publications)

We're expecting a hefty increase in February payrolls today, but even a surprise weak number likely wouldn't prevent a rate hike next week. The trends in all the private sector employment surveys are strong and improving, and jobless claims have dropped to new lows too, though we think that's probably less important than it appears.

30 August 2017 ADP Looks set to Report Another Solid Gain in Payrolls (My Publications)

We're expecting a hefty increase in private payrolls in today's August ADP employment report. ADP's number is generated by a model which incorporates macroeconomic statistics and lagged official payroll data, as well as information collected from firms which use ADP's payroll processing services.

3 June. 2016 May Payrolls Constrained By Verizon Strike, but Should be OK (My Publications)

The downside surprise in April payrolls reflected weakness in just three components--retail, construction, and government--compared to their prior trends. Of these, we think only the construction numbers are likely to remain soft in May. Had it not been for the Verizon strike, then, we would have expected payrolls to rise by just over 200K in May, but the 35K strike hit means our forecast is 170K.

2 Sept. 2015 August ADP and Official Payrolls Likely to be sub-200K (My Publications)

As a general rule, the best forecast of ADP payrolls in any given month is the official estimate for private payrolls in the previous month. This partly reflects the simple observation that payroll trends, once established, tend to persist, but it also is a consequence of ADP's methodology. The ADP number is generated from a model which combines both data collected from firms which use ADP for payroll processing, and lagged official data. The latter appear to be more important in determining in the month-to-month swings in the ADP number. ADP does not hide the incorporation of lagged official data in its model--you can read about it in the technical guide to the report--but neither does it shout it from the rooftops.

07 October. 2016 Payrolls Likely Unexciting Last Month, But Wages Should Rebound (My Publications)

Private sector payroll growth has averaged 190K over the past year, but the six-month average has slowed to 150K. The downshift is consistent with the weakening in survey-based measures of hiring intentions, which began to soften at the turn of the year.

2 December. 2016 Friendly Seasonals Set to Push Payrolls Back Above 200K? (My Publications)

Our payroll model, which incorporates survey data as well as the error term from our ADP forecast, points to a hefty 225K increase in November employment. We have tweaked the forecast to the upside because of the tendency in recent years for the fourth quarter numbers to be stronger than the prior trend, as our first chart shows.

06 October. 2016 ISM Rebound Points to Stronger Payrolls Later in the Fall (My Publications)

The huge rebound in September's ISM non- manufacturing survey, reported yesterday, strongly supports our view that the August drop was more noise than signal.

28 August. 2015 August Payrolls Will Support Fed Inaction - Unemployment Won't (My Publications)

We argued yesterday that the August payroll number is unlikely to be a blockbuster, thanks to a combination of problems with the birth/death model and the strong tendency for this month's jobs number to be initially under-reported and then revised substantially higher. But these arguments don't apply to the unemployment rate, which is derived from the separate household survey.

6 May. 2016 Payrolls Likely On Trend - Watch Out for a Rebound in Wages (My Publications)

Barring some sort of out-of-the-blue shock, we are much more interested in the hourly earnings data today than the headline payroll number. The key question is the extent to which wages rebound after being depressed by a persistent calendar quirk in both February and March.

7 April 2017 Mixed Signals for March Payrolls, but 200K Seems a Fair Bet (My Publications)

Everything but the weather points to a strong headline payroll number for March. Our composite leading payroll indicator has signalled robust job growth since last fall, and the message for March is very clear.

6 June 2017 ISM Non-manufacturing Jobs Up Sharply. Summer Payrolls to Surge? (My Publications)

The 6.4-point rebound in the May ISM non-manufacturing employment index, to a very high 57.8, supports our view that summer payroll growth will be strong. On the face of it, the survey is consistent with job gains in excess of 300K, as our first chart shows, but that's very unlikely to happen.

6 June. 2016 Payrolls Will Rebound Over the Summer - Fed to Hike in September (My Publications)

We chose last week to ignore the payroll warning signal from the ISM non-manufacturing employment index, which rolled over in January and February, because the danger seemed to have passed. The ISM is not always a reliable indicator--the drop in the index in early 2014 was not replicated in the official data, but the plunge in early 2015 was--and usually it operates with a very short lag, just a month or two.

5 May 2017 Payrolls Should Rebound to More than 200K, Wage Gains up too? (My Publications)

If the underlying trend in payroll growth is about 200K, then a weather-depressed 98K reading needs to be followed by a rebound of about 300K in order fully to reverse the hit. But the consensus for today's April number is only 190K, and our forecast is 225K.

29 August 2017 Hurricane Harvey will Depress September Output and Payrolls (My Publications)

The terrible scenes from Texas will play out in the economic data over the next few weeks.

5 September 2017 Underlying Trend in Labor Data Unaffected by "Soft" August Report (My Publications)

We had hoped that the statistical problems which have plagued the initial estimates of August payrolls in recent years had faded, but Friday's report suggests our judgement was premature.

5 Oct. 2015 Why are Payroll Gains Slowing When Employers Want to Hire? (My Publications)

It is possible that the broad-based softness of September payrolls captures a knee-jerk reaction on the part of employers, choosing to wait-and-see what happens to demand in the wake of stock market correction. But that can't be the explanation for the mere 136K August gain, because the survey was conducted before the market rolled over. Even harder to explain is the hefty downward revision to August payrolls, after years of upward revisions. All is not yet lost for August--the last time the first revision to the month was downwards, -3K in 2010, the second revision was +56K--but we aren't wildly optimistic.

5 December. 2016 Labor Market Tightening Continues (My Publications)

We're pretty sure that the unemployment rate didn't drop by 0.3 percentage points in November. We're pretty sure hourly earnings didn't fall by 0.1%. And we're pretty sure payrolls didn't rise by 178K. All the employment data are unreliable month-to-month, with the wages numbers particularly susceptible to technical quirks.

6 January 2017 Decent December Job Gains, and Wage Growth Set for a New High? (My Publications)

We're expecting a 175K increase in December payrolls today. Our forecast has been nudged down from 190K in the wake of the ADP employment report, which was slightly weaker than we expected.

7 Dec. 2015 After the First Hike, Next Week, Wage Gains Will Set the Pace (My Publications)

We're guessing Fed Chair Yellen would have preferred to have another acceleration in hourly earnings and a dip in the unemployment rate along side the hefty 211K leap in November payrolls, but no matter. At its October meeting, the Fed wanted to see "some further improvement in the labor market", and by any reasonable standard a 509K total increase in payrolls in two months fits the bill.

6 Mar. 2015 Decent But Unspectacular Job Gains in February? (My Publications)

Our base forecast for today's February payroll number is an unspectacular 220K, though if you twist our arms we'd probably say that we'd be less surprised by a big overshoot to this estimate than an undershoot. The single biggest argument against a big print today is simply that February payrolls have initially been under-reported in each of the past five years and then revised higher.

9 Feb. 2015 Labor Data Forcing the Fed Into a Corner - (My Publications)

It's always easy to find reasons to doubt single monthly observations of any economic time series, but our first chart makes it very clear that the labor market has strengthened markedly over the past few months. The underlying trend rate of growth in private payrolls is now above 300K for the first time in exactly 20 years, and we seen no reason to expect much change over the next few months.

8 June. 2016 Job Openings Likely Dipped in April, but Remain Very High (My Publications)

A casual glance at our char t below, which shows the number of job openings from the JOLTS report, seems to fit our story that the slowdown in payrolls in April and May--perhaps triggered by the drop in stocks in January and February--will prove temporary. Job openings dipped, but have recovered and now stand very close to their cycle high.

2 July. 2015 Strong Jobs Numbers a Decent Bet, but Reasons for Caution too (My Publications)

Most of the indicators we follow point to another very strong payroll report today; we look for a 260K gain, matching May's performance. The best single leading indicator, the NFIB small business hiring intentions number, points to a massive 320K leap in private payrolls, as our first chart shows.

10 April 2017 Falling Unemployment Matters More than the Weather-hit Jobs Number (My Publications)

The BLS offered no estimate of the impact on payrolls of the snowstorm which hit the Northeast during the March survey week, but it appears to have been substantial. All the leading indicators pointed to a solid 200K-plus reading, more than double the official initial estimate, 98K.

24 Mar. 2016 In the March Employment Report, Wages are Wild (My Publications)

This is the final Monitor before we head out for our spring break, so we have added a page in order to make room to preview the employment report due next Friday, April 4. We expect a solid but unspectacular 175K increase in payrolls, slowing from February's unsustainable 242K, but still robust.

30 November. 2016 ADP Likely to Signal Decent Payroll Growth (My Publications)

The November ADP employment report today likely will show private payrolls rose by about 180K. We have no reason to think that the trend in payroll growth has changed much in recent months, though the official data do appear to be biased to the upside in the fourth quarter, probably as a result of seasonal adjustment problems triggered by the crash of 2008. We can't detect any clear seasonal fourth quarter bias in the ADP numbers.

4 Dec. 2015 November Labor Data Will Support Yellen's Case for Hiking (My Publications)

We're expecting to see November payrolls up by about 200K this morning, but our forecast takes into account the likelihood that the initial reading will be revised up. In the five years through 2014, the first estimate of November payrolls was revised up by an average of 73K by the time o f the third estimate. Our forecast for today, therefore, is consistent with our view that the underlying trend in payrolls is 250K-plus. That's the message of the very low level of jobless claims, and the strength of all surveys of hiring, with the exception of the depressed ISM manufacturing employment index. Manufacturing accounts for only 9% of payrolls, though, so this just doesn't matter.

9 May. 2016 Payrolls Will Rebound--Maybe not in May--and Wages Are Rising (My Publications)

The undershoot in April payrolls, relative to the consensus, is a story of a fluke number in just one sector. Retail payrolls reportedly shrank by 3K, after rising by an average of 52K over the previous six months. Our first chart shows clearly that the retail payrolls are quite volatile over short periods, with sudden and often inexplicable swings in both directions quite common.

8 Dec. 2014 - Falling Unemployment Will Trigger Tightening: Payrolls Will Soar (My Publications)

The first thing to ask after a payroll number far from consensus is whether it is supported by other evidence. We are happy to argue that November's blockbuster report is indeed consistent with a range of other numbers, notwithstanding the unfortunate truth that there are no reliable indicators of payrolls on a month-to-month basis.

06 May. 2015 April ADP Likely Will Look Soft, but it Will Understate Payrolls (My Publications)

Long-time readers will be aware of our disdain fro the ADP employment report, which usually tells us nothing more than that the monthly changes in payrolls tend to mean-revert. That's because the published ADP employment number for each month is generated by regressions which incorporate lagged official payroll data, as well as information from companies which use ADP for payroll processing.

5 June 2017 May Payrolls Hit by the Calendar, Expect a Rebound, and a Fed Hike (My Publications)

We don't believe that payrolls rose only 138K in May. History strongly suggests that when the May payroll survey is conducted relatively early in the month, payroll growth falls short of the prior trend.

22 September 2017 How far will the Hurricanes Depress September Payrolls? (My Publications)

The trend rate of increase in private payrolls in the months before Hurricane Katrina in 2005 was about 240K per month.

6 April 2017 ADP Likely Overstates Payrolls, ISM Non-manufacturing Understates (My Publications)

We don't directly plug the ADP employment data into our model for the official payroll number. ADP's estimate is derived itself from a model which incorporates lagged official payroll data, because payrolls tend to mean-revert, as well as macroeconomic variables including oil prices, industrial production and jobless claims -- and actual employment data from firms which use ADP's payroll processing services.

CNBC - August payrolls should be strong (News and Media)

August could be the month to break the mold with regards to payroll figures, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said.

2 September. 2016 Downside Risk for Hourly Earnings - Two Calendar Quirks Coincide (My Publications)

The key market risk in the August employment report is the hourly earnings number. The consensus forecast is for a 0.2% month-to-month increase, in line with the underlying trend, but the balance of risks is firmly to the downside.

04 Feb. 2016 Are Jobless Claims Starting to Rise? If so, Where Will They Stop? (My Publications)

The pace of layoffs might be picking up. Our first chart looks pretty convincing, but it's much too soon to know for sure. The claims data from mid-December through late January are subject to serious seasonal adjustment problems, partly because Christmas falls on a different day of the week each year and partly because the exact timing of post-holiday layoffs varies from year-to-year.

24 February 2017 Is Sterling's Depreciation a Blessing or a Curse for Profits? (My Publications)

This week's GDP figures showed that firms invested only sparingly in 2016, but their financial fortunes have been bolstered by a recovery in profits. The gross operating surplus of all firms rose by 4.5% quarter-on-quarter in Q4, the biggest increase for 11 quarters. This pushed the share of GDP absorbed by profits up to 21.3%, just above its 60-year average of 21.2%.

20 Feb. 2015 Data Surprises Don't Tell Us Much About the Economy (My Publications)

At the headline level, much of the recent U.S. macro dataflow has been disappointing. January retail sales, industrial production, housing starts, and both ISM surveys--manufacturing and non-manufacturing-- undershot consensus, following a sharp and unexpected drop in December durable goods orders.

21 June. 2016 Monetary Policy Testimony Won't Signal a Change in Fed Thinking (My Publications)

Back in the dim and increasingly distant past the semi-annual Monetary Policy Testimony--previously known as the Humphrey-Hawkins--used to be something of an event. Today's Testimony, however, is most unlikely to change anyone's opinion of the likely pace and timing of Fed action.

9 March 2017 ADP Report Raises the Chance of a Blockbuster February Jobs Number (My Publications)

We expected a consensus-beating ADP employment number for February, but the 298K leap was much better than our forecast, 210K. The error now becomes an input into our payroll model, shifting our estimate for tomorrow's official number to 250K; our initial forecast was 210K.

20 June. 2016 How Can the Fed Escape From the Loop of Endless Inaction? (My Publications)

For some time, the Fed has been locked in a loop of endless inaction. Every time the economic data improve and the Fed signals it is preparing to raise rates, either markets--both domestic and global-- react badly, and/or a patch of less good data appear. The nervous, cautious Yellen Fed responds by dialling back the talk of tightening, and markets relax again, until the next time.

1 Apr. 2015 The Dollar is hurting exporters - more pain to come (My Publications)

The easiest way to track the impact of the rising dollar on real economic activity is via the export orders component of the ISM manufacturing survey. We have been profoundly skeptical of the value of the ISM headline index, because it suffers from substantial seasonal adjustment problems, but the export orders index seems not to be similarly afflicted.

12 May. 2016 Does the Challenger Survey Signal an Upturn in the Pace of Layoffs? (My Publications)

You may have seen the chart below, which shows what appears to be an alarming divergence between the official jobless claims numbers and the Challenger survey's measure of job cut announcements. We should say at the outset that the chart makes the fundamental mistake of comparing the unadjusted Challenger data with the seasonally adjusted claims data.

17 March 2017 February's Manufacturing Data Flattered by Warm Weather? (My Publications)

The latest survey evidence strongly supports our view that momentum is building in the industrial economy, but the official production data continue to lag. Yesterday's March Philly Fed survey was remarkably strong, with the correction in the headline sentiment index -- inevitable, after February's 33-year high -- masking increases in all the subindexes.

17 May 2017 Is Housing Activity set to Reach New Cycle Highs this Summer? (My Publications)

Last week, the MBA's measure of the volume of applications for new mortgages to finance house purchase rose 1.7%.

19 June 2017 Don't Rule Out a September Fed Hike, Watch the Labor Market Data (My Publications)

In the wake of last week's rate increase, the fed funds future puts the chance of another rise in September at just 16%. After hikes in December, March and June, we think the Fed is trying to tell us something about their intention to keep going; this is not 2015 or 2016, when the Fed happily accepted any excuse not to do what it had said it would do.

2 February 2017 March is Alive as the FOMC's Tone Becomes More Direct (My Publications)

The FOMC statement did enough to keep alive the idea that rates could rise in March, but the ball is now mostly in Congress' court. If a clear plan for substantial fiscal easing has emerged by the time of the meeting on March 15, policymakers can incorporate its potential impact on growth, unemployment and inflation into their forecasts, then a rate hike will be much more likely.

13 September 2017 The French Labour Market is on the Up. Will Reforms Follow? (My Publications)

In theory, the headline labour market data in France should be a source of comfort and support for the new government.

12 September 2017 NFIB Labor Indicators Still Very Strong, Despite August Dips (My Publications)

The key labor market numbers from the monthly NFIB survey of small businesses are released ahead of the main report, due today.

10 Mar. 2016 Calendar Distortions Plague the Hours Data, Not Just Wages (My Publications)

We've had some correspondence questioning our view on the "weakness" of February hourly earnings, which we firmly believe were depressed by a persistent calendar quirk. Almost nine times in 10 over the past decade, when the 15th of the month has fallen after the week of the 12th--the payroll survey week--the monthly gain in wages has undershot the prior trend.

11 November. 2016 French Industrial Output Weak in Q3, Likely Better in Q4 (My Publications)

Yesterday's French industrial production data were worse than we expected. Output slipped 1.1% month-to-month in September, pushing the year-over-year rate down to -1.1% from a revised +0.4% in August. Mean-reversion was a big driver of the poor headline, given the upwardly-revised 2.4% jump in August.

11 September 2017 Hurricane Reconstruction Will Lift Wages, Inflation, and the Deficit (My Publications)

As we reach our Sunday afternoon deadline, Hurricane Irma is pounding Florida's west coast with an intensity not seen since Andrew, in 1992.

12 Nov. 2015 NFIB Points to Rising Capex, and Modest Increases in Core Inflation (My Publications)

To the extent that markets bother with the NFIB survey at all, most of the attention falls on the labor market numbers. But these data--hiring, compensation, jobs hard-to-fill--haven't changed much in recent months, and in any event most of them are released the week before the main survey, which appeared yesterday. The message from the labor data is unambiguous: Hiring remains very strong, employers are finding it very difficult to fill open positions, and compensation costs are accelerating.

10 July 2017 Jobs Gains to Push Unemployment Below 4%, the Fed will Hike Further (My Publications)

The gratifyingly strong 222K headline June payroll gain, if repeated through the second half of the year, will put unemployment below 4% by December.

26 Oct. 2015 What Has to Happen for the Fed to Hike in December? (My Publications)

A rate hike from the Fed this week would be a gigantic surprise, and Yellen Fed has not, so far, been in the surprise business. It would be more accurate to describe the Fed's modus operandi as one of extreme caution, and raising rates when the fed funds future puts the odds of action at close to zero just does not fit the bill.

4 Apr. 2016 While We Were Out... (My Publications)

The March employment report didn't tell us what we really want to know. The underlying trend in wage growth remains obscured by the calendar quirk which depresses reported hourly earnings when the 15th of the month--pay day for people paid semi-monthly -- falls after the payroll survey week.

4 Dec. 2014 - November Data Might Hide Underlying Labor Market Strength (My Publications)

The ADP report yesterday has not changed our view that tomorrow's payroll number will be about 180K, well below our estimate of the underlying trend, which is about 250K. ADP's numbers are heavily influenced by the BLS data for the prior month, and tell us little or nothing about the next official report.

2 Nov. 2015 Media and Market Biases Leading Investors up the Wrong Path (My Publications)

We can't recall a time when we have disagreed so strongly with the consensus narrative, in both the media and the markets, about the state of the U.S. economy. We think both investors and the commentariat are too bearish on growth and too complacent about inflation risks, and as a result, insufficiently worried about the speed with which interest rates will rise over the next couple of years.

6 July. 2016 ISM Non-manufacturing Jobs Should Rebound, but How Far? (My Publications)

The shock of the weak May payroll report means that the June numbers this week will come under even greater scrutiny than usual. We are not optimistic that a substantial rebound is coming immediately. The headline number will be better than in May, because the 35K May drag from the Verizon strike will reverse.

31 August 2017 Third Quarter Consumption off to a Strong Start? (My Publications)

Today's wave of economic reports are all likely to be strong. The most important single number is the increase in real consumers' spending in July, the first month of the third quarter.

4 Feb. 2015 ADP Should Beat Consensus, but it's not a Reliable Indicator (My Publications)

The least-bad way to forecast the ADP employment number is to look at the official private payroll number for the previous month. ADP's methodology generates employment numbers from a model incorporating lagged data from the Bureau of Labor Statistics as well as information from companies which use ADP for payroll processing.

4 Mar. 2015 Mean Reversion Makes ADP Look Like a Leading Indicator - It's Not (My Publications)

Mean-reversion is a wonderful thing; it's what gives the ADP employment report the wholly unjustified appearance of being a useful leading indicator of payroll growth. Over time, the best single forecast of payroll gains or losses in any particular month is whatever happened last month.

5 May. 2016 ISM Non-manufacturing Jobs Up, But are Prior Declines a Threat? (My Publications)

Markets and the commentariat seemed not to like the April ADP employment report yesterday but we are completely indifferent. We set out in detail in yesterday's Monitor the case for expecting a below consensus ADP reading--in short, the model used to generate the number includes lagging official data, some of which were hugely depressed by the early Easter--so it does not change our 200K forecast for tomorrow's official number.

4 May. 2016 Will the March Easter Depress the April ADP Employment Number? (My Publications)

The official payroll numbers seem not to be consistently affected by seasonal adjustment problems when Easter falls in March, probably because the earliest possible date for the holiday, the 23rd, comes long after the payroll data are captured. The BLS data cover the week of the 12th.

4 May 2017 Fed on Hold Today After Mixed Data, but a June Hike Still Looks Likely (My Publications)

The Fed surprised no-one yesterday, leaving rates on hold, saying nothing new about the balance sheet, and making no substantive changes to its view on the economy. The statement was tweaked slightly, making it clear that policymakers are skeptical of the reported slowdown in GDP growth to just 0.7% in Q1: "The Committee views the slowing in growth during the first quarter as likely to be transitory".

6 Feb. 2015 Payroll Growth Trending at 250K-plus - Expect Strength Today (My Publications)

The odds favor a robust January payroll report today. The key leading indicator--the NIFB hiring intentions index from five months ago--points to a 275K increase, while the coincident NFIB actual employment change index suggests 260K.

3 November. 2016 Rates Will Rise in December, If Events Don't Intervene (My Publications)

The Fed left rates on hold yesterday, as expected, repeating its long-held core view that inflation will rise to 2% in the medium-term, requiring gradual increases in the fed funds rate.

7 July. 2016 June ADP Set to be Constrained by Weak May Payroll Data (My Publications)

We have argued frequently that the ADP employment report is not a reliable advance payroll indicator--see our Monitor of May 4, for example-- so for now we'll just note that it is generated by a regression model which includes a host of nonpayroll data and the official jobs numbers from the previous month. It is not based solely on reports from employers who use ADP for payroll processing, despite ADP's best efforts to insinuate that it is.

28 Jan. 2016 FOMC is Focussed on the Labor Market - Global Events Matter Less (My Publications)

The FOMC flagged recent market developments as a source of risk to the U.S. economy yesterday, unsurprisingly, but didn't go overboard: "The Committee is closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook."

8 May 2017 Fed Hawks Will Focus More on Unemployment than Wage Gains (My Publications)

At their March meeting FOMC members' range of forecasts for the unemployment rate in the fourth quarter of this year ranged from 4.4% to 4.7%, with a median of 4.5%. But Friday's report showed that the unemployment rate hit the bottom of the forecast range in April.

27 Mar. 2015 No Hit from Oil Sector's Troubles Yet - Gains Elsewhere Offsetting? (My Publications)

We argued in the Monitor yesterday that the plunge in capital spending on equipment in the oil sector could cost about 300K jobs over the course of this year. Adding in the potential hit from falling spending on structures, which likely will occur over a longer period, given the lead times in the construction process, the payroll hit this year could easily be 500K, or just over 40K per month.

8 September 2017 Jobless Claims will be Elevated for Some Time, Payroll hit Uncertain (My Publications)

The 62K jump in jobless claims for the week ended September 2 is a hint of what's to come. Claims usually don't surge until the second week after major hurricanes, because people have better things to do in the immediate aftermath, so we are braced for a further big increase next week.

26 June 2017 Markets are Telling Themselves a Story, Shame it's a Fairytale (My Publications)

The core economic narrative in U.S. markets right now seems to run something like this: The pace of growth slowed in Q1, depressing the rate of payroll growth in the spring. As a result, the headline plunge in the unemployment rate is unlikely to persist and, even if it does, the wage pressures aren't a threat to the inflation outlook.

3 July 2017 Three Jobs Reports in Nine Weeks set to Shift Market Rate Expectations (My Publications)

The next nine weeks bring three jobs reports, which will determine whether the Fed hikes again in September, as we expect, and will also help shape market expectations for December and beyond.

8 March 2017 Could a Bad Payroll Report for February Really Stop the Fed? (My Publications)

With the FOMC decision now just seven days away, the forcefulness of recent Fed speakers has led many analysts to argue that only a spectacularly bad payroll report, or an external shock, can prevent a rate hike next week. External shocks are unpredictable, by definition, and we think the chance of a startlingly terrible employment report is low, though substantial sampling error does occasionally throw the numbers off-track.

3 May 2017 Fed on Hold Today After Mixed Data, but a June Hike Still Looks Likely (My Publications)

The Fed likely will do nothing today, both in terms of interest rates and substantive changes to the statement. We'd be very surprised to hear anything new on the Fed's plans for its balance sheet.

26 May 2017 First Quarter Growth Set to be Revised up, but Data are Very Flawed (My Publications)

We didn't believe the first estimate of Q1 GDP growth, 0.7%, and we won't believe today's second estimate, either. The data are riddled with distortions, most notably the long-standing problem of residual seasonality, which depressed the number by about one percentage point.

9 Mar. 2015 Surging Job Gains, and Sub-Nairu Unemployment to Force June Hike (My Publications)

In the wake of the February employment report, the implied probability of a June rate hike, measured by the fed funds future, jumped to 89% from 71%. The market now shows the chance of a funds rate at 75bp by the end of the year at just over 60%. That still looks low to us, but it is a big change and we very much doubt it represents the end of the shift in expectations.

BUSINESS INSIDER - ECONOMIST: 'The wage number is wrong, payrolls are strong.' (News and Media)

Chief U.S. Economist Ian Shepherdson on U.S. Employment

BUSINESS INSIDER - Here come private payrolls ... (News and Media)

In a note to clients ahead of the report, Ian Shepherdson at Pantheon Macro said that while ADP isn't all that reliable of an indicator for the government's payroll release, set for Friday morning.

31 August. 2016 ADP Likely to Report Strong August Payrolls, But it's Unreliable (My Publications)

We are expecting a hefty increase in the August ADP employment number today--our forecast is 225K, above the 175K consensus --but we do not anticipate a similar official payroll number on Friday. Remember, the ADP number is based on a model which incorporates lagged official employment data, the Philly Fed's ADS Business Conditions Index, and data from firms which use ADP for payroll processing.

11 May. 2015 Payrolls were OK, but May Should be Much Better (My Publications)

In the wake of the soft-looking ADP employment report released on Wednesday, the true consensus for today's official payroll number likely is lower than the 230K reported in the Bloomberg survey. As we argued in the Monitor yesterday, though, we view ADP as a lagging indicator and we don't use it is as a forecasting tool.

21 Oct. 2015 Are Payrolls Slowing Because the Pool of Labor Has Evaporated? (My Publications)

One of the possible explanations for the slowdown in payroll in growth in recent months is that the pool of labor has shrunk to the point where employers can't find the people they want to hire. That's certainly one interpretation of our first chart, which shows that the NFIB survey's measure of jobs-hard-to-fill has risen to near-record levels even as payroll growth has slowed.

1 June 2017 ADP Likely to Rebound Strongly, but Probably Will Overstate Payrolls (My Publications)

We're expecting a strong-looking 225K increase in the May ADP measure of private sector payroll growth, due today. The consensus forecast is 180K.

04 Mar. 2016 Downside Risks for Payrolls and Wages, but Trends are Solid (My Publications)

The underlying trend in payroll growth probably has not changed significantly from the 228K average monthly gains recorded last year. But the average hides wide variations, some triggered by seasonal adjustment problems and others by one-time weather effects or unavoidable and random sampling error. January's below-trend 151K increase was likely a victim of seasonal problems, because payroll gains in recent years have tended to be soft at the start of the year after outsized fourth quarter increases.

7 Oct. 2015 Are Payrolls Slowing Because There's No-one Left to Hire? (My Publications)

In the absence of market-moving data today, we want to take a closer look at the labor market, and, specifically, the idea that payroll growth is slowing because firms cannot find staff they consider suitably qualified for the jobs available. Every indicator of labor demand, with the sole exception of manufacturing-specific surveys, is consistent with very rapid payroll growth, well in excess of 200K per month.

22 July. 2016 July Payrolls Won't Excite Markets, but Hourly Earnings Should (My Publications)

This is the final Monitor before we hit the beach for two weeks, so want to highlight some of the key data and event risks while we're out. First, we're expecting little more from the FOMC statement than an acknowledgment that the labor market data improved in June. After the May jobs report, the FOMC remarked that "...the pace of improvement in the labor market has slowed".

1 September 2017 Expect Strong August Payrolls, but Calendar Distortions will hit Wages (My Publications)

Leading indicators all point to a solid August payroll number. Survey-based measures of the pace of hiring signal a 200K-plus increase, and jobless claims--a proxy for the pace of gross layoffs--are at a record low as a share of the workforce.

3 Dec. 2014 - ADP Likely to Overstate November Payrolls, Thanks to Early Snows (My Publications)

Since its October 2012 revamp, the ADP measure of private employment--the November survey will be released this morning--has tended to be little more than a lagging indicator of the official number.That's because ADP incorporates official data, lagged by one month, into the regression which generates its employment measure.

6 September. 2016 Payrolls Will Revive, but not Immediately, Ignore "So" AHE (My Publications)

Over the past six months, payroll growth has averaged exactly 150K. Over the previous six months, the average increase was 230K. And in the six months to August 2015--a fairer comparison, because the fourth quarter numbers enjoy very favorable seasonals, flattering the data--payroll growth averaged 197K.

4 Sept. 2015 Downside Risks for August Payrolls, but the Trend is Solid (My Publications)

We have no reason to think the underlying trend in payroll growth has changed--the 235K average for the past three months is as good a guide as any--but the balance of risks points clearly to a rather lower print for August. Two specific factors, neither of which have any bearing on the trend, are likely to have a significant influence on the numbers, and both will work to push the number below the 217K consensus.

4 November. 2016 October Payrolls Likely Were Good Enough (My Publications)

For analysts with a broadly positive view of the U.S. economy, it is tempting to argue that the slowdown in payroll growth this year reflects supply constraints, as the pool of qualified labor dries up.

4 Nov. 2015 ADP Tells Us Payrolls Mean- Revert, but That's Not News (My Publications)

The underlying trend in payroll growth ought to be running at 250K-plus, based on an array of indicators of the pace of both hiring and firing. The past few months' numbers have fallen far short of this pace, though, for reasons which are not yet clear. We are inclined to blame a shortage of suitably qualified staff, not least because that appears to be the message from the NFIB survey, which shows that the proportion of small businesses with unfilled positions is now close to the highs seen in previous cycles. If we're right, payroll growth won't return to the 254K average recorded in 2014 until the next cyclical upturn, but quite what to expect instead is anyone's guess.

3 February 2017 Upside Risk For Payrolls and Hourly Earnings in January Data Today (My Publications)

Our payroll model relies heavily on lagged indicators of the pace of hiring, most of which have improved in recent months after a sustained, though modest, softening which began last spring. That's why we expected an above-consensus reading from ADP on Wednesday and from the BLS today.

12 Mar. 2015 Cheap Gas to Boost Spring Sales, but February Looks Soft (My Publications)

Sooner or later, the surge in consumers' spending power triggered by the drop in gas prices and the acceleration in payrolls will appear in the retail sales data.

13 June. 2016 Banxico's Dilemma: Help the Recovery or Support the MXN? (My Publications)

Markets are still discounting Banxico rate increases in the near term, despite the fact that Mexico's inflation is under control. Unless the MXN goes significantly above 18.7 per USD in the near term, or activity accelerates, we see little scope for rate increases until after the Fed hikes. After May's soft U.S. payrolls, and in light of the economic and financial risk posed by the U.K. referendum, we think a hike this week is unlikely.

14 July. 2016 Faster Pay Gains for Job-Switchers Forcing Employers to Pay More (My Publications)

The details of the substantial pay raises being offered to some 18K JP Morgan employees over the next three years are much less important than the signal sent by the company's response to the tightening labor market. In an economy with 144M people on payrolls, hefty raises for JP Morgan employees won't move the needle in the hourly earnings data.

12 Jan. 2016 Why are Payroll Gains So Strong Relative to GDP Growth? (My Publications)

The combination of astounding fourth quarter payroll numbers and weak GDP growth has prompted a good deal of bemused head-scratching among investors and the commentariat. The contrast is startling, with Q4 private payrolls averaging 276K, a 2.4% annualized rate of increase, while the initial estimate for growth seems likely close to 1%. Even on a year-over-year basis, stepping back from the quarterly noise, Q4 growth is likely to be only 2% or so.

1 Oct. 2015 Ignore the ADP Headline, But Dig Deeper to Find Real Information (My Publications)

You might want a strong coffee before you read today's Monitor, because we're going deep inside the relationship between the ADP employment report and the official numbers. We have long argued that ADP's headline reading is not a useful indicator of payrolls, because the numbers are heavily influenced by the official payroll data for the previous month, which are inputs to the ADP model. To be clear, ADP's employment number is not generated solely from hard data from companies which use the company for payroll processing; that information is just one input to their model.

15 June. 2016 Fed on Hold, and Unlikely Clearly to Signal a July Hike (My Publications)

We expect the Fed to leave rates on hold today, but the FOMC's new forecasts likely will continue to show policymakers expect two hikes this year, unchanged from the March projections. We remain of the view that September is the more likely date for the next hike, because we think sluggish June payrolls will prevent action in July.

08 Jan. 2016 Expect Robust Jobs Data, but Downside Risk for Wages (My Publications)

The underlying trend in payroll growth is running at about 225K-to-250K, perhaps more, and the leading indicators we follow suggest that's a reasonable starting point for our December forecast. The trend in jobless claims is extraordinarily low and stable--the week-to-week volatility is eye-catching, especially over the holidays, but unimportant--and indicators of hiring remain robust. The unusually warm weather in the eastern half of the country between the November and December survey weeks also likely will give payrolls a small nudge upwards, with construction likely the key beneficiary, as in November.

10 May. 2016 Do Falling Earnings Signal a Rollover in Payroll Gains? (My Publications)

In the wake of the payroll report on Friday, several readers sent us a version of the chart reproduced below, showing the rates of growth of S&P earnings and private sector payrolls. The message from the chart appears to be that the current trend in payroll growth, a bit over 200K per month cannot be sustained.

12 Jan. 2015 - Unemployment Plunging Towards the Nairu - What Will the Fed Do? (My Publications)

The strength in payrolls in recent months is real. The three-month moving average increase in private payrolls now stands at 280K, despite adverse seasonal adjustments totalling 91K in the fourth quarter, compared to the same period last year.

8 August. 2016 Wage Gains Set to Slide in August, Delaying the Fed Until December (My Publications)

We were happy to see the 255K gain in July payrolls, but we remain nervous about the sustainability of such strong numbers. The jump in employment was very large relative to some of the key survey-based indicators of the pace of hiring, even after allowing for the 29K favorable swing in the birth/ death model, compared to a year ago, and the 27K jump in state and local government education jobs, likely due to seasonal adjustment problems

8 Jan. 2015 - Payroll Still Set for Big December Gain - ADP is Unreliable (My Publications)

We aren't revising our payroll forecast in the wake of the ADP report, which showed private payrolls rising by 241K in December. We expected a bigger increase because ADP tends to lag the official data for the previous month, and the BLS reported a 314K jump in private employment in November, but the "shortfall" is too small to matter.

8 June. 2015 Expect more jobs reports like May's, piling pressure on the Fed (My Publications)

The winter hit to payrolls is now ancient history. Private employment rose by an average of 273K per month in the second half of last year, so May's 262K has restored normal service, more or less. History strongly suggests the number will be revised up, so we are happy to argue that the data convincingly support our view that the weakness in late winter and early spring was temporary, substantially due to the severe weather.

9 Jan. 2015 - Expect Another Robust Payroll Report - Watch Hourly Wages Too (My Publications)

Most of the evidence points to a robust December employment report today, though we doubt the headline number will match the heights seen in November, when the initial estimate showed payrolls up 321K. We look for 275K.

7 July 2017 Upside Risk for Payroll. Despite Soft ADP. Robust AHE a Decent Bet too (My Publications)

ADP's reported 158K increase in private payrolls was very close to our model-based estimate, so it doesn't change our 220K forecast for todays official payroll number, well above the 177K consensus.

6 Nov. 2015 Payroll Uncertainty (Even) Greater than Usual in October (My Publications)

Any model of payrolls based on the usual indicators--jobless claims, ISM hiring, NFIB hiring, and other sundry surveys--right now points to payroll growth at 250K or better. Indeed, the ISM non-manufacturing report on Wednesday is consistent with payroll growth closer to 400K, and the lagged NFIB hiring intentions number points to 300K. Yet the consensus forecast for today's October report is just 182K. Why so timid?

22 Apr. 2016 Jobs Data Suggest--But Don't Guarantee Faster Q2 Growth (My Publications)

Looking back at the numbers over the past few weeks, it is pretty clear that the gap between the strong payroll reports and the activity data widened to a chasm in the first quarter. We now expect GDP growth of about zero--the latest Atlanta Fed estimate is +0.3% and the New York Fed's new model points to 0.8%--but payrolls rose at an annualized 1.9% rate.

5 June. 2015 Payroll consensus looks low, but watch out for the birth death model (My Publications)

All the fundamentals point to a very strong payroll number for May. The NFIB hiring in tentions index, the best single leading indicator of payrolls five months ahead, signalled back in December that May employment would rise by about 300K. The NFIB actual net hiring number, released yesterday, is a bit less bullish, implying 250K, but the extraordinarily low level of jobless claims, shown in our first chart, points to 300K. Finally, the ISM non-manufacturing employment index suggests we should be looking for payrolls to rise by about 260K. Our estimate is 280K.

6 July. 2015 Labor Market is Still Tightening, Despite June Payroll Miss (My Publications)

First, a deep breath: June payrolls, with a margin of error of +/-107K, missed the consensus by 10K. Adding in the -60K revisions and the miss is still statistically insignificant. The story, therefore, is that there is no story. Even relative to our more bullish forecast, the miss was just 37K. Nothing bad happened in June. But we hav e to acknowledge that payroll growth has now undershot the pace implied by the NFIB's hiring intentions number--lagged by five months--in each of the past four months. In June, the survey pointed to a 320K jump in private employment, overshooting the actual print by nearly 100K.

2 Apr. 2015 Most signals point to another strong jobs number (My Publications)

We are taking our spring break starting tomorrow so it makes sense to preview the employment report today. To forecast payrolls, we start with the underlying trend -- mean reversion is the most powerful force in payrolls, most of the time -- and then look for reasons why this month's number might deviate from it.

BUSINESS INSIDER - Top economist throws shade at the 'research institute' that releases a widely followed jobs number (News and Media)

Ian Shepherdsonon why the ADP report is simply not a reliable indicator

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