Just before the ADP employment report was released this morning, I asked Business Insider’s Joseph Weisenthal to give me his prediction — a rather unfair request in retrospect, since the report was due in 2 minutes at that point. He graciously offered his prediction anyway:
@EdMorrissey Hrm. I'll go weak. 120K vs. expectations of 150k.
— Joe Weisenthal (@TheStalwart) May 1, 2013
As it turns out, Joe was almost exactly correct:
Private sector employment increased by 119,000 jobs from March to April, according to the April 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 March report, which reported job gains of 158,000, was revised downward to 131,000 jobs.
Goods-producing employment rose by 6,000 jobs in April, its slowest pace of growth in seven months. Though it accounted for most of the weakness in goods production job growth in March, construction growth picked up in April and the industry added 15,000 jobs over the month. Meanwhile, manufacturers shed 10,000 jobs in April—the first decline in three months and the largest since September 2012.
Service-providing jobs increased by 113,000, the weakest pace of growth in seven months.
Among the service industries reported by the ADP National Employment Report,
trade/transportation/utilities had the largest gain with 29,000 jobs added over the month. Professional/business services followed, adding 20,000 jobs, and financial activities added 7,000 jobs.
Normally we put the ADP results through the 60-80% rinse cycle, but they actually missed last month even with that in mind. Their sharp downward revision to the March numbers still puts their estimate far above the BLS figure of 88K in March.
Applying the 60-80% filter to ADP’s new numbers, that would give us a projected figure for the BLS jobs report due Friday at somewhere between 71,000 and 95,0000. That is an ugly, ugly range — at the low end, only half of what is needed just to keep up with population growth. And “ugly” is exactly the word CNBC uses in its headline:
Economists surveyed by Reuters expected the ADP report to show the private sector created 150,000 jobs in April, down from 158,000 in March.
“Nearly every industry has seen slower growth since the beginning of the year,” Moody’s economist Mark Zandi said on CNBC. “Smaller businesses are experiencing much weaker growth.”
Joe Weisenthal points out that manufacturing actually retreated:
The number is out and it’s weak. Analysts were looking for 150K new private sector jobs. …
This chart from the report is particularly interesting. According to ADP, manufacturing actually lost jobs!
Expect pessimism in the markets today, although most of this was probably already suspected. Even the higher expectation of 150K from ADP was a stagnation-level prediction. The BLS report is going to come in well short of that on Friday. Tomorrow, we should have Gallup’s data, and can start framing expectations of the official jobs report, and perhaps more importantly, predict whether the workforce numbers are still eroding past 34-year lows.