Wednesday, May 1, 2013
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
) 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 economic
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 front.
Director of Research
AUTOMATIC DATA (ADP): Free Stock Analysis
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