With the BLS jobs report due on Friday, we once again start looking at the precursor data. ADP, the payroll-processing giant, predicts that the US added 198,0000 jobs in the previous month, which would be a relatively positive report — if reliable:
Private sector employment increased by 198,000 jobs from January to February, according to the February 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. The January 2013 report, which reported job gains of 192,000, was revised upward by 23,000 to 215,000 jobs.
That’s one issue with ADP’s reliability. Their original January analysis overshot the BLS report by 35,000, as the government only showed a water-treading level of 157,000 jobs added. The BLS could certainly revise the previous report, but a revision of that size would have eyes popping and critics demanding some answers. Despite their efforts to reform their analysis to make it more predictive, it seems that it’s still a good idea to use a 60-80% rule when it comes to ADP, whose analyses usually are valuable in defining trends rather than data points. That would put a good guess at Friday’s BLS number at around 160,000 — another water-treading number, and more in line with the economic data coming from January.
In fact, that’s what the market more or less expects, too, according to CNBC:
Private companies added 198,000 jobs in February, well ahead of analyst estimates and indicating that the labor market is continuing to thaw, according to a report Wednesday.
Economists had expected the count by ADP and Moody’s Analytics to show 170,000 new positions.
The report comes two days before the Department of Labor releases its nonfarm payrolls total, which likely will show a net of 152,000 new positions. The Labor numbers include government positions.
Gallup isn’t quite as optimistic. Two weeks ago, they reported that jobseekers couldn’t find any momentum toward “quality” jobs in the market. Their last weekly payroll-to-population figure dropped two tenths of a point to 43.3%, and their take on the unemployment rate (corresponding to the BLS U-3 number) rose two tenths of a point to 8.1%. Gallup surveys roughly parallel those of the BLS Household Survey, which at least theoretically makes it a better predictor for BLS data.
Either way, the numbers don’t show any real momentum to the scale of job creation needed to re-employ the millions that left the workforce in hopelessness over the last five years. We need a lot more than 198,000 jobs per month to get those workers back in the workforce.