ADP Employment Survey (July)
Expectations: -60,000 jobs cut
Previous (June): -79,000 jobs cut
Revised (June): -77,000 jobs cut (an upward revision by just 2,000 jobs)
Today’s release (July): +9,000 jobs gained
The report was well-received by markets. The ADP survey was initiated in 2001 and is a privately funded survey of nonfarm payrolls in the private sector. Historically, it has been used to forecast the official government employment report that is released by the BLS during the same week. However, during 2008 the ADP private payroll survey has not predicted well the BLS private employment report; the ADP survey has underestimated job losses by an average of 104,000 jobs per month over the last six months.
A closer look
According to the ADP survey, the BLS’ report for July, which is released on August 1, will show a gain of 30,000 jobs; the 9,000 gain in private sector jobs (the ADP report for July) plus 21,000 gain in government jobs, which is the six-month average. We will see.
I personally side with the ADP report and expect just -1,000 jobs lost in July – a far cry from the consensus report of -72,000. Why? Industrial production rose during the month of June (and I expect that it rose in July) and the 4-week average of initial unemployment claims fell during the survey period ending July 12.