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ADP Bad Enough To Shake Even Goldman's Confidence
Today's ADP number came in at +13k, compared to expectations of +60k, with the previous number revised to +57 from +55. It was basically a disaster, as it now puts the already shaky expectations for the June NFP number in even greater jeopardy. The number was so bad it even has Goldman's Jan Hatzius scratching his head. As the firm has lately been horrendous in predicting the NFP, we anticipate that Goldman will likely downward revise its +150,000 gains in payrolls ex-census over the next 48 hours.
From Goldman:
USA: ADP Employment Change - Weaker Than Expected
Actual: +13,000
Previous: +57,000
Consensus: +60,000
Released: Wednesday, June 30, 2010 at 08:15 (New York time)Weaker Than Expected
BOTTOM LINE: ADP report weaker-than-expected, showing an increase of only 13k in June.US-MAP:
ADP Employment Report -3 (3, -1).KEY NUMBERS:
ADP report says private-sector payrolls +13k in June vs median forecast +60k.MAIN POINTS:
1. The ADP report on private-sector payrolls rose by 13k in June, coming in weaker than expected. (The May number was revised up from +55k to +57k.) While employment at service providing companies rose (+30k), payrolls at goods-producing firms declined by 17k. Employment at medium and large companies rose (+11k and +3k, respectively), while employment at small companies fell by 1k. The pattern of employment losses at small firms in manufacturing is suggestive of weakness in construction employment following the expiry of the homebuyer tax credit.2. While the ADP count was too low in March and April, the report provided an accurate early indication of the weak BLS private sector payroll reading in May. Therefore, this weaker-than-expected report is suggestive of downside risk to our preliminary estimate of a 150k gain in payrolls excluding census workers.
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QE 2.0, Stimulus 2.0 on the way.
Already has begun....the House passed a bill in the dark of night to extend the housing tax credit to those already under contract.
http://realestateconsumernews.com/real-estate-market/house-passes-bill-t...
not exactly in "the dark of the night." this happened with 5 or 10 mins to go in yesterday's trading session. keep in mind this only affects people that hadn't yet closed the deals which they had already signed.
Interesting, yet will not be enough. True QE2 is needed in USA and of course EU and UK. Odds are they will all make an announcement within a few days of each other to keep currencies devaluating evenly. The problem is in the EU where during the G8/20 they do not want to do QE (OBAMAnation fail).
There is going to have to be a housing tax credit version 3.0. This legislation only extends the closing date for properties under contract as of the original April 30 date. With the plumment in the number of houses going under contract in May (and June, I believe) there will be another tax credit version coming. Where else will the money come from for consumer spending but the housing ATM? With home sales such a visible statistic and such an indicator of "perceived" wealth, TPTB want to have people see numbers that make them think things are getting better.
Inclusive of the banker hiring riot I keep reading about in the press...
Why not? They are guaranteed to make (steal) mucho dinero in any environment. That's what fascist oligarchies are all about. Have a nice day.
Has Goldman not been watching CNBS & Bloomberg to be educated about The Jobless Recovery?
At some point when there are misses on the magnitude of -75%, do the predictors and so called economists admit they really have no idea what is going to happen? This is what should be panicking investors.
+1
No. They have PHDs so their misses are due to the complex interaction of multiple factors with dynamic feed back effects.
I correctly anticipated the weak number but since I dont have a PHD, my "hit" and my reasoning do not advance econmomic discussions in any meaningful way.
Thats why they live off taxpayer money and I live off trading, I can freely admit when Im wrong and act accordingly.
They wait until proven wrong and print more money and make excuses.
You're playing with math...-75% (or even +75%) is an easy occurrence when the raw numbers are so small (a consensus of 4k with a reported 1k gets you the same result, but it's meaningless).
I'm not claiming the number was good...hell, even if it hit the consensus estimate it still wouldn't have been a great number...I'm merely pointing out the fact that were basically dealing with rounding errors at these levels.
So to take your arguement the otherway consensus of 4 mil and came in at 1 mil is a rounding error? this wasn't a 3k miss ...it was a 47k miss....or 15 times larger than your example.
Don't be foolish. The 4k / 1k was just an example bringing the numbers even closer to zero to prove the point. The actual 60k / 13k numbers are still VERY close to zero in the context of the US labor pool...47k is still basically a rounding error.
Your counterargument of 4 mil / 1 mil would have been a entirely different story. If those were the numbers, I would have given your comments high praise...fact is however, those were not the numbers.
75% is still 75%. One would think you've never dealt with percentages.
Example 1: You have $1 million and can take a coin flip to either win or lose $750k.
Example 2: You have $1 and can take a coin flip to either win or lose lose 75 cents.
Would your likelihood to take each coin flip be the same? The percentages are the same.
Again, it is about trends not leverage. I am certain that you have had econ 101 courses in your studies. If I were to point a gun at your head and say gave you the option of pointing it 22.5 degrees from your head would you take it? It is after all only 12.5% of pointing at myself. So 22.5 out of 180 is a small number by your logic here. (Yes my logic is flawed here becuase like I said before, it is about trends and not actual numbers).
What would be a miss on the ADP report in your calculus?
Simply replying to your "75% is 75%" comment.
As for your question, my response is this was a miss, flat out. Those surveyed got it wrong. But when dealing with a very small fractional change on a large base, it's pretty easy to see how that could happen. If the forecast were for 600k and the number came in at 130k, the percentage miss would have been the same, but the consequences of the miss would have been much greater.
This depends on your perspective does it not? If all one has is $1 then the 75c is devastating.
The point really being that a slow but continual gain was expected.
Mar to Apr ~ 34,000 Apr to May 57,000 May to June 13,000. This is a dramatic trend change and not in line (anywhere near in line) with expectations.
If we are talking about the entire pool of workers which the BLS doesn't cover (only insured jobs of those that have already entered the workforce) The unemployment number is far higher...on the order of +20%....yes I agree statistically the rise and expected rise are miniscule. In which case the market shouldn't react positively to any rise under 250,000.
But I argue had the numbers come inline at 60,000 we would have seen a huge jump in the markets. Markets are reacting to miniscule numbers to the plus side and not to the minus. ADP reaction vs Chicago PMI reaction. Both miniscule (by your count) yet tremendously different reactions.
I can't argue with that.
I appreciate the discussion folks (I love this site)...but I have to get back to work now, so I don't find myself contributing to the miss in next month's ADP report.
I also appreciate the counter point. Drive on and have a good one.
Ahhh, Perry the Platypus... I understand your point about rounding errors, but shouldn't that only apply to much larger numbers when you're talking about 48k missing out of 62k?
Yes, but the rounding error isn't the miss against the estimate, it's the miss (or estimate, or actual) against the size of the US labor pool. See my second comment posted above.
Okay, you keep referencing the entire labor pool, which I do understand why, but it is flawed to do that. That is not what the ADP report is about. We are trying to see a growth or decline in private jobs, basically the second derivative of the jobs trend. So a miss on that number means that the trend is accelerating at a negative rate. Not a good thing when 400k+ were being laid off a week for the past year and a half.
Personally I think the ADP report is advertising for ADP. :)
Trust me, I'm not disputing the fact the numbers are bad. As I stated before, even hitting the consensus estimate would not have made the employment situation in this country any brighter. My only point was that large percentages have little meaning when you're dealing with raw numbers close to zero. You might say 60k is a number far from zero, but in the context of the change in the US labor pool, it is not.
Here's an analogy. Let's say a fund manager has back to back years beating the S&P 500 by 1.5x. The significance of this beat is vastly different from year to year if in year one the S&P returns 0.02% and in year two it returns 20%.
A disastrous report heading right into the teeth of the July state and local buzzsaw.
Can't wait for the day Goldman squids will be bankrupt and dissolved. In about oh, 1-2 years.
What happened? Did the Census forget to rehire all those they fired to jack up the numbers?
That would be the bright side...if the number sucks with census hire/fire/rehire then things are way worse than anyone might think
The one thing that the average Joe is seeing very clearly this time around is that those who work and play on Wall Street consider a jobless recovery to be all right news. In other words, corporations can still make plenty of money during times like these for a multiple of reasons, many of which are not to the benefit of out-of-work and on food stamps average Joe.
For decades, the average Joe has been indoctrinated and conditioned to believe that what's good for Wall Street is good for Main Street. This myth has been exposed as a fairy tale. It not reads this way.
"What's good for Wall Street might or might not be good for Main Street. Now shut the fuck up and get back on the hamster wheel or your fired. There a long line of unemployed outside ready to replace your sniveling ass in a NY second."
Or something like that.
The good news? The next generation of hamster wheel inhabitants are already being trained via video games and iPhones. Corporate American can afford to wait for the perfect hamster to be developed by R&D.
CD, the effect you are talking about has been demonstrated in devloping nations like China for years. It is how they keep wages depressed. The big difference in places like the US is 70 % of the economy is dependent upon consumers or in macroeconomics terms demand. With credit rapidly shrinking and everyone unemployed, it is only a matter of a few years before corporations lose all demand for their products and the shell game ends.
Is Joe Biden ever going to address his +500k assurances from earlier this year? Obama yesterday saying the economy is strong. I guess when you have your own plane and your banking buddies tell you everything is great, you go with that. These people are a joke.
Many years ago I watched my son play in a high school football game. My son's team was slaughtered 42 to 3. I did notice one thing. The cheerleaders were always cheer leading, regardless of the score. They constantly reassured the team and the fans that we can win.
No.........we could not, at least not this game.
The take away? Cheerleaders and cheer leading politicians are liars. And the high school cheerleaders have nicer legs.
Cheerleaders under those circumstances have honour. A small but meaningful difference.
I wasn't dissing the cheerleaders. I was mocking the politicians. Seems I need to break out the sarcasm signs again.
hear hear (rah rah)
Why I watch Becky Quick... Rah rah ree kick'm in the knee.... heh
Laying this on ole foot in the mouth is hitting below the belt. How many times does the teleprompter have to come out on the front lawn with Ben & Tim and remind you this is all W's fault.
On a serious note, I assume they are going to "set aside" (not count) the (however many million) newly unemployed gulf coast residents as a special case, as they are doing with the 1.5 million census workers.
I had not heard that... is this true. Are "displaced" census workers not counting against UE numbers? They count towards employment on the way in, not against on the way out? Gotta link for that? Almost too good to be true.
Yes Cursive,
It is a sad state of affairs. Someone said we were all "bears" around here yesterday. Since when is REALISM always bearish? Most of us here are very OPTIMISTIC when it comes to gold and silver are we not? When I tell people that gold will double or triple and silver do even better from these levels (a minimum, IMHO), they still give me that same bewildered bullshit look that I've seen for the last ten years.
Ground control to Major Tom....
The conditioning requires we all slap on happy faces and ignore the disaster. It's all surface because that's as deep as the honesty goes.
It's called Hollywood Happy. Mr. T says "Get with the program fool. Then shut your dang pie hole." :>)
http://www.youtube.com/watch?v=Eisa5AZ20W0
But wait, there's more!
From the ISM New York report:
Business costs rose, however. The Prices Paid index jumped to 51.8, having fallen below 50 in May, to post a 44.4 reading.
And once again, The Double Whammy Economy is in full flower. Deflating employment with simultaneously inflating business cost inputs. The same disease that afflicts consumers. And that disease pervades the entire US economy: while incomes and assets continue to deflate, fixed costs and the cost of living continue to inflate. It's only the inflation rate that's subdued. However any inflation in the face of deflating incomes constitutes a Double Whammy by virtue of having an accentuated impact.
How can we have a recovery if everything you own deflates while everything you need inflates? How can small businesses survive in this Double Whammy World? Today's ADP report shows small business actually cut jobs. Small business can't contain costs sufficiently to hire. In fact they're laying off just to tread water.
I don't see what the problem is.
+13k private jobs
-240k census jobs
+377k birth/death jobs
=======
+150k jobs
The new NEW math.
LOL. Please e-mail this to Liesman. He needs the moral support.
This is just your "Bear Bias" showing, gents.
It's all good. Barry and Bennie told us so yesterday, as reported on CNBC.
It's... all... good.
(that's sarcasm, of course - for people whose sarcasm filter is in the shop today)
I was thinking about this the other day, about broken sarcasm detectors. It's not our fault. The world's turning upside down so we no longer know what is "normal" and what is not. After all, sarcasm depends on certain "obvious" truths and lies to be widely know.
It's not like a play or a movie where the musical score gives us all clues for when to be happy, sad, angry, excited and so on. I think to calm the folks down and to promote peace and happiness, the government should paint everything, including trees, roads and dogs, that wonderful insane asylum puke green. And while they're at it, they should pipe in soothing music 24/7.
Better hurry, the natives are getting restless.
That's an excellent point, CD. This is, indeed, The New Normal.
Cheers -
And there goes the S&P into the green. I knew BigBen and Timmay were going to be at their trading desks early today. What a laughable joke.
Looks like FinReg has put a bid under the financials. I never thought the banksters would get this far with the rape of America.
That is why I closed my TAZ and picked up some TNA. This was an obvious false pump in the waiting. Watching the overnight movement in the ES was hilarious. I was watching buy orders of 40+contracts go flying by, and it was an obvious after hours pump with taxpayer money.
@firstdivision
Keep a tight stop on the TNA. The bid won't last. This bitch is rolling over.
Ah but they did. The tip off for me was Joe Barton at the BP Tony Hayward hearings with his "Apology" to BP for a government "shakedown". He later retracted it, but the blunder was there for all to see: the long hand of oil interests shamelessly and brazenly bending and shaping policy even in the face of despicable acts and behavior.
They are brazen, my friend.
All hail the "free" market, eh?
A 9-10 handle, zero-volume UP move on the S&P on nothing but awful news. Benny must be making it rain Benjamins as we speak.
By some measures we've kind of reached Utopia: we get a bump in consumer confidence with close to 2 million new jobless per month. All thanks to the government's new math. We print and bail, and we don't foreclose or call in any loans. We let the unemployed live rent free. That acts as a kind of stimulus! And we can shop till we drop for Chinese electronics!
no no..this is a jobless, profitless, growthless...recovery..
at least it is funny, I keep laughing on every tick up on the S&P.
I smell near desperation to end this quarter without any more blood in the water. The last two days of this week before the three day weekend should be quite interesting.
This crisis is all a farce. Credit system reform and trade policy are root causes of our problem and forced on us by a corrupt ruling class.
The US produces less than the manufacturable goods it consumes. There is your jobs program. Quit taxing producers and shift to import taxation.
This is a national security issues too. Former heads of the Army Material Command have noted that our inability to manufacture low tech items is a very real risk.
The current assumption is that we will have time to rebuild our production base before the next major conflict. That may not be the case.
By hallowing out our manufacturing capabilities we have hallowed out our security.
BTW a lot of innovation comes from manufacturing producers. As we loose them we continue to lose innovation.
Ah, Chicago PMI to save the day! An inline report trumps a 75% miss anyday....green shoots are a poppin!...besides the S&P MUST close above the 1040 mark or GS will have to revise expectations down.
Read old literature. It was common for most to be unemployed; this is how I know things to be in foreign countries. One or two people take care of the entire family.
If someone can get a govt job, they are considered a prize and can support far more people. Prices were high and living standards very low. Read Crime & Punishment, it's a great look at how employment, living conditions, and expectations were in a climate of relative scarcity.
It explains a lot of the differing perceptions of women and their mate choices in terms of foreigners vis a vis american girls. Scarcity and the need to make compromise versus abundance and princess mentality of entitlement.
Thanks, v. perceptive.
Some of the newer readers evidently do not understand how statistics work. If you stick around a while you will see a pattern evolve something like this.
Politician says the crisis is over, unemployment will be down to 1 or 2 percent next quarter.
Economist says he is right, but being conservative he predicts the number will be 3 or 4 percent which is nothing to worry about
Actual figures released, officially unemployment is 5.6%
A month later, the figure is revised to a more accurate 6.7%. No one notices or cares.
Some math nerd says there was a math error, the true number is 7.1%. Even less people care.
An even older math nerd points out that they have changed the way the statistics are gathered and calculated 4 times in the last 20 years, every time to make the figures look rosier. If they used the same formula they used in the 70s and 80s the number would be 12.9% which is depression territory. By this time not even his wife is listening.
Stick around long enough and you will see this pattern repeat over and over again in unemployment, consumer price index, inflation, and every other type of statistic.
This Just In:
Scientists have found actual sea water in the Gulf of Oil.
More on this later. Back to you..
Certainly a lot of details like that to take into consideration. Thanks windows vps | cheap vps | cheap hosting | forex vps