A day before the official U.S. Labor Department jobs numbers get released, an ADP preview report is fueling speculation that the October report will become a November surprise.
The payroll processor and HR services firm, and its new partner, Moody’s Analytics, said this morning that 158,000 private sector jobs were created last month. That’s considerably better than the 138,000 the economists polled by Reuters expected, and is also ahead of the private sector job estimates economists expect to see in tomorrow’s government report.
Wall Street, which is still recovering from the hurricane that closed the markets Monday and Tuesday, reacted positively to the ADP report, adding almost 140 points to the Dow Jones Index by early afternoon. Helping to fuel the rally were two other reports:
- The Conference Board said its Consumer Confidence Index rose to a four-year high of 72.2 in October, a nearly four point improvement over the revised September number. It’s more than 30 points higher than where it was in September last year.
- Initial unemployment filings declined last week to 363,000, down 9,000 from the previous week, and 35,000 lower than for the same week a year ago. The four-week average was 367,250, down 1,500 from the previous week and almost 33,000 lower than last year.
Official Labor Department report is out tomorrow
Among the elements used to calculate the Consumer Confidence Index is a measure called the Present Situation Index. It’s based on survey respondents opinion of both current business and employment conditions. Last month, that index jumped from 48.7 to 56.2. The Conference Board said:
Those claiming business conditions are “good” rose to 16.5 percent from 15.3 percent, while those saying business conditions are “bad” edged down to 33.1 percent from 33.8 percent. Consumers’ appraisal of the labor market was also more positive. Those stating jobs are “plentiful” increased to 10.3 percent from 8.1 percent, while those claiming jobs are “hard to get” declined to 39.4 percent from 40.7 percent.”
While the numbers are all welcome news, economists are sticking with their initial estimates for the Labor Department’s report tomorrow. Various surveys of analysts and economists put the average of their estimates right around 125,000 non-farm jobs created in October. The report, from the Department’s Bureau of Labor Statistics, includes counts of government jobs; the ADP report is exclusively private sector.
ADP changes its jobs count
For October, ADP switched its research and analysis partner and significantly altered the way it prepares its jobs count. In the past, ADP and its then partner Macroeconomic Advisers were criticized for offering up job numbers that rarely synched with what the government reported a day or two later.
It’s hard to say, however, which of the two reports is the more accurate. ADP uses its payroll data — and now has expanded both the amount it uses, and incorporates other employment data — in developing its numbers. The BLS uses surveys businesses and residents complete and mail back.
Commenting on the ADP data, Joseph Trevisani, chief market strategist for Worldwide Markets, told Reuters: “I really don’t know what to say about them (ADP) because the numbers are on a different methodology, and we have no track record at all on this new methodology.”
“The number doesn’t have any effect on my thinking for the payrolls number on Friday, which I have at 125,000. This 158,000 private number out of ADP isn’t something that is going to change my view on that,” he added.