U.S. ADP Private Payroll Increase Moderates

The ADP/Moody's National Employment Report indicated that private nonfarm payrolls increased 163,000 during August (1.8% y/y) following a 217,000 July gain, revised from 219,000. The increase disappointed expectations for a 190,000 rise expected in the Action Economics Forecast Survey. It was the smallest increase since October. It pulled the three-month moving average change to 186,000, down from 227,000 averaged in Q1. During the last ten years, there has been a 96% correlation between the change in the ADP figure and the change in nonfarm private-sector payrolls as measured by the Bureau of Labor Statistics.

The Automatic Data Processing Research Institute survey is based on ADP's business payroll transaction system covering 411,000 companies and nearly 24 million employees. The data are processed by Moody's Analytics Inc., then calibrated and aligned with the BLS establishment survey data. The ADP data cover private sector employment only.

Small-sized payrolls expanded 21,000 (1.0% y/y) after a 59,000 July gain. Three-month average growth has decelerated from the recent high of 85,000 in Q1'17. Large-sized payrolls improved 31,000 (2.5% y/y) following a 42,000 rise. Three-month average growth deteriorated to 45,000, roughly half the growth as of October. Medium-sized payrolls increased 111,000 (2.4% y/y). Three-month average growth picked up to 103,000, the strongest in roughly four years.

Private service-producing payrolls increased 139,000 (1.7% y/y), the weakest gain in four months. Education & health services employment rose a lessened 31,000 (2.0% y/y) while professional & business services jobs rose a weakened 38,000 (2.6% y/y). Employment in the leisure & hospitality sector increased a moderated 25,000 (2.1% y/y). The number of trade, transportation and utilities jobs firmed a steady 21,000 (1.1% y/y). Financial activities jobs increased a lessened 7,000 (1.4% y/y). Employment in the information sector rose an improved 8,000 (-0.1% y/y).

Employment in the goods-producing sector rose 24,000 (2.4% y/y), the smallest increase since October. Job growth in the factory sector remained strong, posting a 19,000 rise (1.8% y/y). Growth in construction employment weakened to 5,000 (3.0% y/y) from a 35,000 December high. Jobs in the natural resource & mining sector fell 1,000 (+6.2% y/y).

The ADP National Employment Report data can be found in Haver's USECON database; historical figures date back to April 2001 for the total and industry breakdown, and back to January 2005 for the business size breakout. The expectation figure is available in Haver's AS1REPNA database

ADP/Moody's National Employment Report	Aug	Jul	Jun	Aug Y/Y	2017	2016	2015
Nonfarm Private Payroll Employment (m/m chg, 000s)	163	217	178	1.8%	1.8%	1.9%	2.3%
Small Payroll (1-49)	21	59	33	1.0	1.3	1.9	1.9
Medium Payroll (50-499)	111	116	82	2.4	1.9	1.5	2.3
Large Payroll (>500)	31	42	63	2.5	2.3	2.7	3.0
Goods-Producing	24	41	27	2.4	1.5	0.8	2.0
Construction	5	16	10	3.0	3.1	4.3	5.3
Manufacturing	19	22	13	1.8	0.7	0.2	1.2
Service-Producing	139	177	151	1.7	1.8	2.2	2.3

 

U.S. Initial Unemployment Insurance Claims Fall to Fewest Since 1969
by Tom Moeller  September 6, 2018

Initial claims for unemployment insurance decreased to 203,000 (-31.2% y/y) during the week ended September 1 from an unrevised 213,000 during the prior week. It was the lowest level since December 1969. The Action Economics Forecast Survey called for 215,000 applications. The four-week moving average of initial claims declined to 209,500, also a 49 year low. During the last ten years, there has been a 75% correlation between the level of claims and the month-on-month change in nonfarm payrolls.

In the week ending August 25, continuing claims for unemployment insurance eased to 1.707 million (-11.9% y/y from the slightly upwardly revised 1.710 million a week earlier. The four-week moving average of claimants declined to 1.719 million, the lowest level since late-1973.

The insured rate of unemployment remained at its record low of 1.2%, where it's been since early May.

Insured rates of unemployment varied widely by state. During the week ended August 25, the lowest rates were in South Dakota (0.22%), Nebraska (0.35%), Indiana (0.44%), North Dakota (0.44%) and North Carolina (0.47%). The highest rates were in Rhode Island (1.93%), Pennsylvania (1.98%), Connecticut (2.25%) and New Jersey (2.47%). Among the largest states by population, the rate was 1.81% in California (this was also the fifth highest rate in the country), 1.00% in Texas, 1.51% in New York, and 0.52% in Florida. These state data are not seasonally adjusted.

Data on weekly unemployment insurance are contained in Haver's WEEKLY database, and they are summarized monthly in USECON. Data for individual states are in REGIONW. The expectations figure is from the Action Economics Forecast Survey, carried in the AS1REPNA database.

Unemployment Insurance (SA, 000s)	09/01/18	08/25/18	08/18/18	Y/Y %	2017	2016	2015
Initial Claims	203	213	210	-31.2	245	263	278
Continuing Claims	--	1,707	1,710	-11.9	1,961	2,136	2,267
Insured Unemployment Rate (%)	--	1.2	1.2	1.4 (Aug 2017)	1.4	1.6	1.7

 

U.S. ISM Nonmanufacturing Index Improves
by Tom Moeller   September 6, 2018

The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) increased to 58.5 during August from 55.7 in July. Despite the increase, the index remained below its February high of 59.5. The Action Economics Forecast Survey expected a reading of 56.5. The ISM data are diffusion indexes where readings above 50 indicate expansion.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure released Tuesday. This composite rose to 58.8 and recouped most of its July decline. During the last ten years, there has been a 71% correlation between this index and the quarter-on-quarter change in real GDP.

Most of the component series in the non-manufacturing survey increased. The business activity reading rose modestly to 60.7, but only recovered some of July's decline. As the new orders reading rose to 60.4, it too remained near July's low. The supplier deliveries index increased to 56.0, indicating a faster pace of order fulfillment.

The employment index inched up to 56.7, its highest level since January. During the last ten years, there has been an 88% correlation between the ISM nonmanufacturing sector jobs index and the monthly change in private service plus construction sector payrolls. Twenty-two percent (NSA) of industries reported a rising jobs level while 11% indicated a decline.

The prices paid index eased to 62.8 from 63.4, and has been fairly stable since late last year. Twenty-eight percent of firms (NSA) increased prices and six percent of firms paid less.

Among the other detail indexes, which are not seasonally adjusted, the export order series strengthened m/m, but has been broadly stable this year. The import index eased, while the order backlog index rebounded following a sharp July decline.

The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.

ISM Nonmanufacturing Survey (SA)	Aug	Jul	Jun	Aug'17	2017	2016	2015
Composite Diffusion Index		55.7	59.1	54.3	57.0	54.9	57.1
Business Activity		56.5	63.9	56.5	60.1	58.0	60.8
New Orders		57.0	63.2	55.7	59.3	57.5	59.2
Employment		56.1	53.6	54.1	55.2	52.6	56.0
Supplier Deliveries (NSA)		53.0	55.5	51.0	53.2	51.5	52.5
Prices Index		63.4	60.7	56.4	57.7	52.6	50.6

 

U.S. Factory Orders and Shipments Strengthen
by Tom Moeller  September 6, 2018

Activity in the factory sector continues to improve. Manufacturers' orders increased 0.7% (6.1% y/y) during June following an unrevised 0.4% May increase. Manufacturing shipments surged 1.0% (8.4% y/y) after a 0.6% May rise.

Durable goods orders improved 0.8% (3.1% y/y), revised from 1.0% in last month's advance report. The rise followed a 0.3% May decline. Orders for transportation equipment jumped 2.1% in June (-6.2% y/y) due to a 20.2% surge in defense aircraft bookings. Nondefense aircraft orders rose 4.2% while motor vehicle & parts orders rose 0.9%. Total factory orders excluding transportation improved 0.4% (9.1% y/y). Machinery orders were little changed (+5.6% y/y) following a 4.6% rise. Orders for computers & electronic products rose 0.8% (10.4% y/y) and electrical equipment bookings gained 0.8% (8.4% y/y).

Nondurable goods orders, which equal shipments because nondurables are shipped when ordered, gained 0.5% (9.4% y/y) after a 1.1% jump. Petroleum shipments increased 0.8% (39.6% y/y) with higher prices. Food product shipments slipped 0.2% (+0.9% y/y) for the second straight month. Basic chemical shipments increased 0.8% (6.3% y/y) and paper product shipments gained 0.5% (6.8% y/y). Shipments of apparel rose 1.6% (7.6% y/y).

Shipments of durable goods strengthened 1.5% (7.5% y/y) last month after a 0.2% gain. Shipments of transportation products surged 3.7% (6.7% y/y) reflecting strength in truck shipments. Shipments of civilian aircraft rose 6.0% (8.0% y/y), but automobile shipments fell 0.7% (-9.2% y/y). Shipments outside of the transportation sector increased 0.5% (8.8% y/y) following a 0.9% rise. Machinery shipments improved 0.6% (7.1% y/y) after a 1.2% strengthening. Computer & electronic product shipments rose 0.1% (5.7% y/y). Electrical equipment & appliance shipments fell 0.3% (+4.4% y/y) for the second straight month.

Unfilled orders of durable goods rose 0.4% (3.6% y/y), up for the fifth consecutive month. Transportation equipment backlogs gained 0.3% (2.7% y/y). Excluding the transportation sector, unfilled orders rose 0.6% (5.7% y/y) following two straight 0.7% increases. Machinery backlogs improved 0.2% (3.2% y/y). Unfilled orders of computer & electronic products increased 0.6% (3.5% y/y) and electrical equipment & appliance backlogs rose 1.1% (1.9% y/y) after three straight months of moderate increase.

Inventories of manufactured products ticked 0.1% higher (5.1% y/y) after stronger monthly gains back through the middle of last year. Durable goods inventories slipped 0.1% (+4.6% y/y). Transportation product inventories declined 1.4% (+2.4% y/y). Outside of the transportation sector, inventories rose 0.5% (5.8% y/y), the strongest increase this year. Machinery sector inventories increased an accelerated 0.4% (4.9% y/y). Computer & electronic product inventories rose 0.4% (3.4% y/y). Nondurable goods inventories improved 0.4% (5.9% y/y). Basic chemical inventories rose 0.8% (3.8% y/y) but food product inventories eased 0.1% (-0.1% y/y), down for the third straight month. Petroleum refinery inventories rose 0.7% and by roughly one-third y/y.

All these factory sector figures are available in Haver's USECON database.

Factory Sector (% chg) - NAICS Classification	Jul	Jun	May	Jul Y/Y	2017	2016	2015
New Orders		0.7	0.4	6.1	5.7	-2.9	-8.2
Shipments		1.0	0.6	8.4	5.0	-3.2	-6.2
Unfilled Orders		0.4	0.5	3.6	2.0	-1.2	-2.7
Inventories		0.1	0.2	5.1	4.5	-0.7	-0.8