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Real Time Insight

Today’s July ADP figure showed a gain of 200,000 private sector jobs comfortably above the consensus outlook for an 180,000 increase.   May and June surveys were revised up a net 17,000.  The survey results compare to a June 2012 to June 2013 monthly average gain of 155,000.  The trade is looking for July BLS private payrolls to rise 187,000, and total payrolls to expand 175,000.

Most sectors show job growth:

Examining the sub sectors, construction jobs increased 22,000, transport and utility employment jumped 45,000, financial jobs rose 4,000, and business services surged 49,000.  The manufacturing sector bucked the trend and contracted 5,000.

Small business created 82,000 jobs, while large buiness generated 57,000 new jobs.

ADP has been conservative to the BLS:

Over the last year, the ADP private payroll survey has under estimated BLS private payrolls by 30,000.  The ADP number has been below the BLS number 9 of the past 12 months.  The table displays the relationship between the two series.

If one looks at the relationship between the ADP survey and BLS private payrolls, the relationship is loose with the ADP survey explaining only 53% of the variation in the BLS number.  100% would suggest a perfect predictor while 0% would argue for no relationship.

I have three questions:

1) What is your guess for Friday’s BLS private sector payroll number?

2) Will today’s ADP number and labor market conditions influence today’s FOMC results?

3) Will healthy job growth help the S&P 500 sustain a gain over 1700?

Let me know!

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