This morning's positive labor market reading provides the
market another opportunity to build on Tuesday's record close.
The momentum in this market simply refuses to die down, humbling
the doubters amongst us (yours truly included). That said, the
tone of recent economic data has been on the positive side,
confirming that the economy was in good enough
The February jobs tally from
Automatic Data Processing
) came in better than expected this morning - up +198K vs.
consensus of +170K. The January tally was revised higher by 23K
to 215K. This report is expected to serve as a preview of the
non-farm payroll report from the government's Bureau of Labor
Statistics (BLS) coming out on Friday. The consensus expectation
is for private-sector job gains of +167K and 'headline' gains of
+160K. The government sector has been losing 5K to 10K jobs
monthly, which will likely accelerate in the coming months as a
result of the sequester.
The likely jobs impact of the sequester is in some doubt, with
estimates ranging from overall payrolls being lower by 500K to
700K, primarily in the government sector. This would translate to
monthly government job losses in the 50K to 60K range over the
coming months, though the actual job losses will most likely be
much smaller. A greater use of furloughs instead of pink slips
will likely show up in fewer hours worked than actual job losses
over the remainder of this year. We will have to wait and see
what impact the sequester will have on government jobs in the
coming months, but the private sector appears to be in healthy
enough shape to withstand it.
The ADP report is showing plenty of momentum in small-business
hiring, with employers having less than 50 employees adding +77K
jobs in February. Medium sized business (less than 500 employees)
and large businesses (1000+ employees) added +65K and +57K jobs
during February. Goods producing sectors added +34K jobs, while
service providing sectors generated +164K jobs. Construction and
manufacturing were both positive, confirming what we saw from the
employment components of the two ISM reports.
Uncertainty with respect to the extent of negative impact from
the Northeast snowstorm on the BLS jobs numbers will likely keep
analysts from raising their estimates for Friday. Some estimates
put the snowstorm impact to be as high as 50K in the Friday
reading. But irrespective of the actual jobs numbers on Friday,
it is increasingly becoming clear that the tax hikes and fiscal
uncertainty has had no negative impact on actual economic
activities thus far. And we see that in the stock market's new
highs as well.
for January are scheduled for release today at 10:00 AM EST and
are expected to decrease by 2.3% following the December increase
of 1.8% to $484.8 billion.
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