ADP Employment Report Fell Short

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The ADP Employment Report fell short of expectations in November, but the ISM Non-Manufacturing report and the Factory Orders report flew high.

The ADP Employment report fell short in November.  Economists had been expecting to see 125,000 payroll jobs added in November.  Instead, the reported total was 118,000.  Citigroup:  11,00 Jobs Gone  The ADP National Employment Report is watched grades1 ADP Employment Report Fell Shortvery closely as a signal of what to expect in the monthly non-farm payrolls report from the Bureau of Labor Statistics.  Although the correlation has not been very accurate, this is the second month of a new system being used by ADP.  The non-farm payrolls report includes government jobs, but the ADP report is private sector only.

From the report:

Private sector employment increased by 118,000 jobs from October to November, according to the November ADP National Employment Report®, which is produced by Automatic Data Processing, Inc.  (ADP®), a leading provider of human capital management solutions, in collaboration with Moody’s Analytics.  The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.  The October 2012 report, which reported job gains of 158,000, was revised down by 1,000 to 157,000 jobs.

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Mark Zandi, chief economist of Moody’s Analytics, said, “Superstorm Sandy wreaked havoc on the job market in November, slicing an estimated 86,000 jobs from payrolls.  The manufacturing, retailing, leisure and hospitality, and temporary help industries were hit particularly hard by the storm.  Abstracting from the storm, the job market turned in a good performance during the month.  This is especially impressive given the uncertainty created by the Presidential election and the fast-approaching fiscal cliff.  Businesses appear to be holding firm on their hiring and firing decisions.”

The ISM Non-Manufacturing Index for November smashed expectations.  Economists had actually been expecting to see a decrease to 53.6 from October’s 54.2.  A figure above 50 percent indicates expansion.  The Non-Manufacturing Index rose to 54.7 in November.  When Prices Have No Meaning

From the report:

The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee.  ”The NMI™ registered 54.7 percent in November, 0.5 percentage point higher than the 54.2 percent registered in October.  This indicates continued growth at a slightly faster rate in the non-manufacturing sector.  The Non-Manufacturing Business Activity Index registered 61.2 percent, which is 5.8 percentage points higher than the 55.4 percent reported in October, reflecting growth for the 40th consecutive month.  The New Orders Index increased by 3.3 percentage points to 58.1 percent.  The Employment Index decreased by 4.6 percentage points to 50.3 percent, indicating growth in employment for the fourth consecutive month but at a slower rate.  The Prices Index decreased 8.6 percentage points to 57 percent, indicating prices increased at a slower rate in November when compared to October.  According to the NMI™, 11 non-manufacturing industries reported growth in November.  Respondents’ comments are mixed; however, the majority of survey respondents reflect a cautious optimism about current economic conditions.”

The Commerce Department’s Census Bureau released its Manufacturers’ Shipments, Inventories and Orders report for October on Wednesday.  This is also referred to as the “Factory Orders report”.  Although economists had been expecting to see a decline in new orders by 0.1 percent, they increased by a whopping 0.8 percent.

From the report:

New orders for manufactured goods in October, up three of the last four months, increased $3.8 billion or 0.8 percent to $477.6 billion, the U.S. Census Bureau reported today.  This followed a 4.5 percent September increase.  Excluding transportation, new orders increased 1.3 percent.  

Shipments, up three of the last four months, increased $1.9 billion or 0.4 percent to $482.3 billion.  This followed a 0.7 percent September increase.

Unfilled orders, up four of the last five months, increased $2.8 billion or 0.3 percent to $982.9 billion.  This followed a 0.1 percent September increase.  The unfilled orders-to-shipments ratio was 6.25, up from 6.24 in September.

Inventories, up four consecutive months, increased $0.5 billion or 0.1 percent to $616.0 billion.  This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.6 percent September increase.  The inventories-to-shipments ratio was 1.28, unchanged from September.

The major ETFs expected to respond to the ADP November Employment Report, the ISM Non-Manufacturing Index for November and the October Factory Orders report are:

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