ADP report shows job creation still stalled

posted at 2:41 pm on June 5, 2013 by Ed Morrissey

The first of a few signals leading up to Friday’s official jobs report from the Bureau of Labor Statistics suggests that the four-year stagnation continues.  ADP and Moody’s Analytics calculates the overall growth of private-sector jobs, and usually (but not always) overshoots the BLS figures by a considerable amount, which makes their 135,000 figure look even weaker:

Private sector employment increased by 135,000 jobs from April to May, according to the May ADP National Employment Report® , which is produced by ADP® , a leading provider of human capital management solutions, in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. April’s job gains were revised downward to 113,000 from 119,000.

Manufacturing took a hit, perhaps less surprising after this week’s ISM report:

The goods-producing sector shed a total of 3,000 jobs in May. Although construction payrolls rose by 5,000 in May, on top of an increase of 8,000 jobs in April, the manufacturing industry recorded a total loss of 6,000 jobs in May.

CNBC warns of a summer slowdown with this big miss on ADP:

Private-sector job creation was weaker than expected in May, as the economy struggled to break free of what appears to be a summer slowdown on the horizon.

ADP and Moody’s Analytics reported just 135,000 new positions for the month, below expectations of 165,000. …

The poor showing sets the stage for a possibly weak nonfarm payrolls report on Friday, when the Labor Department had been expected to show 169,000 new jobs.

Economists sometimes will use the ADP numbers to adjust their estimates for the government account, even though the private-sector count has been a historically unreliable gauge.

That’s true, but when ADP misses, it almost always overshoots the BLS report. Normally, I’d apply a 60-80% factor to the ADP report when it comes to predicting the official numbers. That would suggest a range from 81K-108K for the BLS report, far below the ~150K the US economy needs to keep pace with population growth.  If that’s the result, it would either mean that the unemployment rate will rise, or more likely, that the workforce participation rates will drop again from their current generational lows.

On the other hand, Gallup’s Job Creation Index report looks much sunnier:

Gallup’s U.S. Job Creation Index increased to 22 in May, the highest score for any month since April 2008.

The Job Creation Index is now much improved from the all-time monthly low of -5 recorded in February and April 2009.

The net job creation score is based on 37% of workers telling Gallup that their employer is hiring new people and expanding the size of its workforce, and 15% saying their company is letting people go and reducing the size of its workforce. The percentage “hiring” is the highest since August 2008 and the percentage “letting people go” is the lowest since March 2008.

This is an indirect measure, however. Gallup will have its direct measures on job creation out tomorrow, which mirror the BLS methodology.  There is at least some correlative corroboration for the conclusion that terminations have slowed, however, in the weekly initial jobless claims series, which has slowly dropped back into a range that approaches a correlation with significant job growth.

Back to pessimism from the NFIB:

Small businesses cut back on staff slightly in May, the first decline in six months and a sign of weakness in the job market recovery.

The National Federation of Independent Business said on Wednesday employment shrank by 0.04 workers per firm last month.

Which is correct?  We’ll see what Gallup says tomorrow and the BLS on Friday, but based on manufacturing numbers, I’d tend toward the pessimistic ADP report.  Meanwhile, this chart from Business Insider doesn’t look promising, either.

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Where is bayam, who said yesterday that Hillary will beat the crap out of any R/C…in 2014!!!

I said “Yeah, go for it!!!”

Schadenfreude on June 5, 2013 at 2:44 PM

llup ?
Hmmmm….now weren’t they the ones raided /intimidated by Holder ?

burrata on June 5, 2013 at 2:44 PM

Gallup ?
Hmmmm….now weren’t they the one raided /intimidated by Holder ?

burrata on June 5, 2013 at 2:45 PM

Time to pivot again?

LoganSix on June 5, 2013 at 2:47 PM

I’ve been so distracted by the scandals, I forgot about the job report due out Friday. Imagine how overwhelmed poor Obama must feel. You know he’s just dying to pivot toward the economy.

/

Doughboy on June 5, 2013 at 2:49 PM

Wreck-covery Summer IV!!!

geojed on June 5, 2013 at 2:54 PM

Bur the economy is improving….. dear leader said so, so it must be true

cmsinaz on June 5, 2013 at 2:57 PM

Black Friday sales were super good last year and the DOW is over 15k.

This proves nothing.

Its Republicans fault.

This report is racist.

Gatsu on June 5, 2013 at 2:57 PM

Where is bayam, who said yesterday that Hillary will beat the crap out of any R/C…in 2014!!!

I said “Yeah, go for it!!!”

Schadenfreude on June 5, 2013 at 2:44 PM

Actually he said that Hillary would “route” the Republican. He also said last month that we were “on the precipice” of a recovery.

slickwillie2001 on June 5, 2013 at 3:00 PM

Gatsu on June 5, 2013 at 2:57 PM

You missed multiple “Blame Bush” in that.

nobar on June 5, 2013 at 3:00 PM

All due to republicans over-reach.

HumpBot Salvation on June 5, 2013 at 3:01 PM

Ain’t Obamanomics wonderful? Applied for your food stamps yet?

GarandFan on June 5, 2013 at 3:02 PM

Gatsu on June 5, 2013 at 2:57 PM

As Of 3pm today Dow is under 15K. It’s 14,982.54 – 1954.61

CoffeeLover on June 5, 2013 at 3:04 PM

If I count properly this our FOURTH Summer of Recovery. If I count like Biden it is our fifth.

jukin3 on June 5, 2013 at 3:04 PM

esh….down -192.01 right now sorry no edit function now – 196

CoffeeLover on June 5, 2013 at 3:05 PM

With all the scandals brewing it’s time to move jobs and the economy to the front burner. Focused like a laser 24/7 from here on out.

antipc on June 5, 2013 at 3:07 PM

As Of 3pm today Dow is under 15K. It’s 14,982.54 – 1954.61

CoffeeLover on June 5, 2013 at 3:04 PM

That just proves we need more QE, stimulus, and unemployment benefits for everyone.

Gatsu on June 5, 2013 at 3:07 PM

Gatsu…………lol that is exactly what they are saying on MSNBC right now! Except for Rick Santelli.

CoffeeLover on June 5, 2013 at 3:08 PM

Back down over -200.

The last 15 minutes of the market should be interesting!

CoffeeLover on June 5, 2013 at 3:09 PM

blaming…ADP revised April jobs numbers lower and May fell far short of the expected 165K.

Now down -218

CoffeeLover on June 5, 2013 at 3:11 PM

If you like your job you can keep your job.

docflash on June 5, 2013 at 3:14 PM

ADP report shows job creation still stalled

Really? Next thing you’ll be telling me is that water is wet.

Physics Geek on June 5, 2013 at 3:15 PM

Government numbers are fraudulent…

PatriotRider on June 5, 2013 at 3:17 PM

What’s the average stay on unemployment these days? six months? a year? Does anyone know?

Stats coming out of the regime are PROPAGANDA. They lie. For proof just check out the IRS, Holder, and Susan Rice. Just saying what we all know and the public sector workers like to tell us, “I was just following orders.”

The numbers are baked. Except for this stat reported on RKO the other day. It made me laugh. The most used disorder for claiming SSDI is “Social Anxiety Disorder.”

dogsoldier on June 5, 2013 at 3:22 PM

Which is correct? We’ll see what Gallup says tomorrow and the BLS on Friday, but based on manufacturing numbers, I’d tend toward the pessimistic ADP report. Meanwhile, this chart from Business Insider doesn’t look promising, either.

Manufacturing is contracting. I am seeing similarities between now and September/October 2009.

Every minor contraction manufacturing has me paranoid that we are revisiting what happened after the housing crash. Maybe because the wounds have not yet fully healed.

weaselyone on June 5, 2013 at 4:01 PM

Wreck-covery Summer IV!!!

geojed on June 5, 2013 at 2:54 PM

This thing is getting more sequels than the Police Academy movies.

Happy Nomad on June 5, 2013 at 4:59 PM

Bur the economy is improving….. dear leader said so, so it must be true

cmsinaz on June 5, 2013 at 2:57 PM

I think we are missing a very important point here. Today’s numbers didn’t have time to the reflect Mooch yelling at an angry lesbian. Look for a market correction.

- Just predicting tomorrow’s Morning Joe market analysis by Mika.

Happy Nomad on June 5, 2013 at 5:02 PM

Time to pivot again?

LoganSix on June 5, 2013 at 2:47 PM

Um, to focus like a laser on jobs or the NBA finals? I don’t understand your question.

socalcon on June 5, 2013 at 5:11 PM

“But but but….but Mr. President, we ran this simulation 8 times on Sim City 2010 and every time the leaders ratings went up…I can’t explain why the country isn’t responding correctly”

BobMbx on June 5, 2013 at 5:54 PM

April’s job gains were revised downward to 113,000 from 119,000.

Shock, surprise, incredulous, and so on and so forth.

“But but but….but Mr. President, we ran this simulation 8 times on Sim City 2010 and every time the leaders ratings went up…I can’t explain why the country isn’t responding correctly”

BobMbx on June 5, 2013 at 5:54 PM

Haven’t played Sim City 2010 yet. Does it include a way of putting unemployed Sims on public assistance? Union bosses selling out their members? Political leaders sending industrial zones to China? Would be more realistic if they did.

Dr. ZhivBlago on June 5, 2013 at 6:18 PM