Noisy ADP Print Declines But Beats Expectations; Just 4000 Manufacturing Jobs Added

For some reason, despite the ADP number coming month after month within a 3 std deviation of the actual NFP, and thus confirming it has absolutely no predictive power, vacuum tube headline scanning algos continue to trade off the number which explains why futures had a brief spike moments ago after the latest September ADP Private Payrolls number came out at 162K, on expectations of 140K. Of course, last month's print which initially came at 201K only to see the August NFP come in at less than half this print, was revised materially lower to 189K, as was the July ADP which was cut by 17K to 156K. But who cares - the algos already had done their ramp job a month ago. Remember: in an election year, all Initial Claims will be revised upward, while all ADP. NFP prints must be revised downward - it's not called the economy for nothing. In other news, when adding the +/-150,000 margin of error on both side of the equation, we can boldly say that according to the ADP, Friday's NFP will come in a range of -1,000,000 to +1,000,000. Courtesy of John Lohman:

Perhaps the only relevant datapoint in the entire ADP report is that manufacturing jobs added were 4,000 in September. Only 996,000 more to go until we hit the president's solemn promise of revitalizing US manufacturing. There was however, a last hurrah for Wall Street: "The financial services sector added 7,000 jobs in September, marking the fourteenth consecutive monthly gain." Correct: the Wall Street layoffs usually begin just before bonus season.

A pretty, if completely irrelevant chart of ADP data:

The breakdown:

From the report:

Private-sector employment increased by 162,000 from August to September on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The ADP National Employment Report, created by Automatic Data Processing, Inc. (ADP®), in partnership with Macroeconomic Advisers, LLC, is derived from actual payroll data and measures the change in total nonfarm private employment each month. Estimated gains in previous months were revised lower: The July increase was reduced by 17,000 to an increase of 156,000, while the August increase was reduced by 12,000 to an increase of 189,000.


According to today’s ADP National Employment Report, employment in the nonfarm private business sector rose 162,000 August to September on a seasonally adjusted basis. Employment in the private service-providing sector expanded 144,000 in September, down from 175,000 in August. Employment in the private goods-producing sector gained 18,000 in September. Manufacturing employment rose 4,000, while construction employment rose 10,000, the strongest since March when mild winter weather was boosting construction activity. The financial services sector added 7,000 jobs in September, marking the fourteenth consecutive monthly gain.


Carlos A. Rodriguez, president and chief executive officer of ADP said, “This month’s ADP National Employment Report shows an increase of 162,000 new jobs in September. Today’s report shows that year-to-date employment gains averaged 171,000 jobs per month, compared to an average increase of 138,000 jobs per month compared to the same period last year.”


According to Joel Prakken, chairman of Macroeconomic Advisers, LLC, “The September increase was above the consensus forecast for today’s release and for the official jobs number due out Friday from The Bureau of Labor Statistics. Continued solid gains in employment since Spring further allay fears that the broad economic recovery may be undermined by a softening trend in employment. The gain in private employment in September is strong enough to suggest that the national unemployment rate may have declined.”


Employment levels among medium-sized payrolls—those with 50 to 499 workers—rose by 64,000, while employment on large payrolls—those with 500 or more workers—increased by 17,000 jobs in September.

More noise here.