Anticipating The December Employment Report
The most important economic news this week is Friday's employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, probably the most significant 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 December estimate for nonfarm private employment from ADP at 238K new jobs and a substantially lower TrimTabs estimated range of 110K to 140K total new jobs.
The ADP 238K estimate came in well above the Investing.com forecast of 200K for the ADP number.
The Investing.com forecast for Friday's BLS report is 196K nonfarm new jobs (actual PAYEMS number). The Briefing.com PAYEMS consensus is 197K new jobs and their own estimate is for a lower 185K.
Here is an excerpt from today's ADP report:
| "The U.S. private sector added 238,000 jobs in December, surpassing November as the strongest month for job growth in 2013," said Carlos Rodriguez, president and chief executive officer of ADP. "It's encouraging news that hopefully bodes well for 2014." Mark Zandi, chief economist of Moody's Analytics, said, "The job market ended 2013 on a high note. Job growth meaningfully accelerated and is now over 200,000 per month. Job gains are broad-based across industries, most notably in construction and manufacturing. It appears that businesses are growing more confident and increasing their hiring." |
Here is the press release from TrimTabs:
| "The Fed's money printing is doing far more to inflate asset prices than it is to spur job creation," said David Santschi, Chief Executive Officer of TrimTabs. "Based on real-time tax data, we estimate that the economy added an average of 115,000 jobs per month in 2013, below the average of 151,000 jobs per month in 2012." TrimTabs' employment estimates are based on an analysis of daily income tax deposits to the U.S. Treasury from all salaried U.S. employees. They are historically more accurate than the initial estimates from the Bureau of Labor Statistics. In a research note, TrimTabs explained that it is citing a range rather than a single figure for its December estimate because the impact of bonus shifting last year is skewing income tax withholdings. Many employers paid bonuses that would normally have been paid in January 2013 and February 2013 in December 2012 to avoid higher income tax rates. This bonus shifting made year-over-year comparisons last month much tougher. "The impact of bonus shifting will continue to skew withholdings through February, so we'll be providing ranges for our estimates for the next two months as well," noted Santschi. TrimTabs reported that wage and salary income -- which includes year-end bonus payments -- declined 3.8% year-over-year in real terms in December, down from 0.6% year-over-year in November. It attributed the decline almost entirely to the impact of bonus shifting. |
Here is a visualization of the three series over the previous twelve months along with the ADP and TrimTabs estimates for September.
A key difference among the three is that the ADP and the BLS series, unlike the TrimTabs data, are subject to substantial revisions. Also, as I point out in the chart above, TrimTabs tracks all salaried US employees; ADP tracks private employment, and the BLS series is for Nonfarm Payrolls.
For a sense of the critical importance of nonfarm employment for the economy, see my Big Four Economic Indicators, which I will be updating on Friday.
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