Economists never know what the weather “was” until economic reports come out!

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Published : April 08th, 2017
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Category : Opinions and Analysis

On Wednesday, Econoday was singing the praises of ADP’s payroll predictions. Let’s take a look., especially in light of revisions.

Highlights

The March employment report may not prove as impressive as February or January but it still looks to be very strong, based on ADP’s 263,000 estimate for private payrolls. Details in the ADP report include a strong 49,000 gain for construction and a 30,000 increase for manufacturing. Professional & business services are another strong positive, up 57,000. This report will ease concern that heavy weather in the mid-month sample week for March may skew Friday’s report lower.

Recent History

ADP’s employment estimate not only predicted strength in both February and January payrolls but accurately predicted outlier strength.

Today’s Job Report

The change in total nonfarm payroll employment for January was revised down from +238,000 to +216,000, and the change for February was revised down from +235,000 to +219,000. With these revisions, employment gains in January and February combined were 38,000 less than previously reported. Over the past 3 months, job gains have averaged 178,000 per month.

ADP vs BLS

Month ADP BLS Miss
January 246,000 216,000 30,000
February 298,000 219,000 79,000
March 263,000 98,000 165,000
3-month Average 269,000 177,667 91,333

ADP no longer looks so glowing.

Today Econoday had this to say:

“Throw ADP out, it was the weather in March! Or at least the Category 3 storm that swept the Northeast may explain a much weaker-than-expected 98,000 increase in March nonfarm payrolls. This compares with Econoday’s consensus for 175,000 and a low estimate of 125,000” says Econoday.

The big storm hit during the sample week of the employment report and apparently delayed new hiring, or at least that will be the takeaway from the report,” added Econoday.

Economists vs Weather

Time and time again, economists never know what the weather “was” until economic reports come out!

Mike “Mish” Shedlock

Source : mishtalk.com
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Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
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