The market sees all evidence of economic weakness as
guaranteeing continued Fed support. As a result, stocks have
moved into record territory as economic and earnings data have
come on the weak side. We have the manufacturing ISM reading
coming out a little later, but the jobs data from Automatic Data
Processing (ADP) this morning was clearly off the mark. The ADP
miss today means that estimates for Friday's non-farm payroll
report from the government's Bureau of Labor Statistics (BLS)
will likely come down. But I would be surprised if the market
would react differently in any material way to today's soft
The April ADP jobs tally came in weaker than expected this
morning - up +119K vs. consensus of +155K. The March tally was
revised lower -27K to 131K. This report is expected to serve as a
preview of the non-farm payroll report from the government's BLS
coming out on Friday. The consensus expectation is for 'headline'
BLS gains of +150K. A straight extrapolation of today's ADP
report would mean that Friday's BLS number would be around 110K
instead of the 150K consensus expectation pre-ADP.
Small businesses, with employers having less than 50
employees, added +50K jobs in April. Medium sized businesses
(less than 500 employees) added +26K jobs in April, while large
businesses (1000+ employees) added +43K jobs during the month.
Weakness in the small-business group is the most pronounced, with
some anecdotal evidence that changes to healthcare mandates may
be having an impact on hiring trends in that space.
The goods producing sectors added +6K jobs in April,
substantially lower than the last few months, while the
services-providing sector's tally of +113K jobs in the month was
not substantially different from sector's recent pace.
Construction added +15K jobs, a slower pace than would be
expected given the broad momentum in the sector. Manufacturing
lost -10K jobs, reconfirming the negative trends from other data
points about the factory sector. We will see how the April
manufacturing ISM reading shows a little later, though the
Chicago PMI numbers from Tuesday don't bode well on that
Today's economic releases include the
ISM Manufacturing Index
which is expected to decrease to 51.0 and
, both of which are scheduled for release at 10:00 AM EST.
To read this article on Zacks.com click here.