Employment Week and the ADP Employment Report

It's the first week of the month, which means that the market is looking with bated breath towards Friday and the Employment Situation report.  Analysts will be scrutinizing the preliminary information in an effort to gauge which way the news will swing, and that preliminary information comes in three flavors:

• The ADP Employment Report (and more on that in a moment)
• The Challenger Job-Cut Report (out tomorrow)
• The Department of Labor's Unemployment Insurance Weekly Claims Report (also due out tomorrow)

Of the three reports, the Department of Labor is the biggest.  But people still pay attention to the others, because every scrap of information has its place.

 

So.  the ADP Employment Report.  ADP, in case you're wondering who they are and why anyone would care, is also known as Automatic Data Processers, Inc.  They are, according to their web site, "one of the world's largest providers of business outsourcing solutions," and they offer "a wide range of human resource, payroll, tax and business administration solutions".  This gives them an enormous amount of information about private sector employment trends, and they use it to compile a monthly report about job gains and/or losses by sector.

 

The Econoday-surveyed analysts that follow this report are mildly bearish on the subject.  The March report shoed a gain of 209,000 private sector jobs, but the consensus is for only 183,000 new jobs in April.  That's not great because, while employment growth is a sign of a healthy economy, slowing employment growth is an indicator that the economy may be slowing down as well.  After all, businesses don't hire if they don't have a need for the workers.

 

Let us now turn to the April 2012 ADP National Employment Report and see if the analysts will be correct and happy.  According to the report, employment in the US nonfarm private business sector increased by 119,000 in April, missing expectations by 64,000.  Not great news.  Also, the March job growth figures have been revised downwards to only 201,000 new jobs.  The service-providing sector saw a gain of 123,000 jobs, while the good-producing sector lost 4,000 jobs and the manufacturing sector lost 5,000 jobs[1].  Large payroll companies saw a gain of 4,000 jobs, medium payroll companies saw a gain of 57,000 jobs, and small payroll companies saw a gain of 58,000 jobs[2].

 

So, our buildup to the Employment Situation starts out mixed.  Not great news, but a far cry from terrible.

 

[1]  I'm not entirely certain what the difference between "manufacturing" and "goods-producing" is.  Sounds like a topic to research for later.

[2]  Large payroll is defined as 500+ employees, medium payroll is defined as 50 to 499 employees, and small payroll is defined as up to 49 employees.