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Friday, March 29, 2024

Anticipating the Employment Report for August

Courtesy of Doug Short.

The economic mover and shaker this week is Friday employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, probably the most publicized in the near term being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository).

Today we have the August estimate of 204K new nonfarm private employment jobs from ADP, which we can consider along with yesterday’s estimate of 231K total new jobs from TrimTabs.

The ADP 204K estimate came in below the Investing.com forecast of 220K for the ADP number.

The Investing.com forecast for forthcoming BLS report is 225K nonfarm new jobs (the actual PAYEMS number). The Briefing.com PAYEMS consensus is 223K new jobs and their own estimate is for a higher 235K.

Here is an excerpt from today’s ADP report:

“August marks the fifth straight month of employment gains above 200,000, continuing an encouraging trend for the U.S. labor market,” said Carlos Rodriguez, president and chief executive officer of ADP.

Mark Zandi, chief economist of Moody’s Analytics, said, “Steady as she goes in the job market. Businesses continue to hire at a solid pace. Job gains are broad based across industries and company sizes. At the current pace of job growth the economy will return to full employment by the end of 2016.”

Here is the press release from TrimTabs:

TrimTabs Investment Research estimates that the U.S. economy added 231,000 jobs in August, down from 271,000 jobs in July, which was the highest total in more than four years.

“Employment growth topped 200,000 jobs in five of the past six months,” said David Santschi, Chief Executive Officer of TrimTabs Investment Research. “The labor market has been picking up steadily this year despite the wild swings in the government’s quarterly GDP figures.”

TrimTabs’ employment estimates are based on analysis of daily income tax deposits to the U.S. Treasury from the paychecks of the 139 million U.S. workers subject to withholding.

“One likely explanation for the strength of job growth this year is the expiration of emergency unemployment insurance benefits, which drew some of the unemployed into lower-wage positions by necessity,” said Santschi. “But other indicators we track suggest broader economic growth has picked up as well.”

In a research note, TrimTabs explained that the TrimTabs Macroeconomic Index recently hit a fresh record high, real wage and salary growth remains brisk, the employment indices of the Institute for Supply Management’s Manufacturing and Non-Manufacturing Surveys are firmly in expansion territory, and unemployment claims data is positive.

“Nothing we see in our macroeconomic indicators or in statements from Fed officials suggests the Fed will not end its bond buying in October as expected,” said Santschi. “Assuming the Fed stops printing, financial markets in general and the U.S. stock market in particular will lose a huge pillar of support.”

Here is a visualization of the three series over the previous twelve months along with the latest ADP and TrimTabs estimates.

The key difference among the three is ADP tracks private employment, TrimTabs tracks all salaried US employees, and the BLS series is for Nonfarm Payrolls.

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