Global| May 04 2016U.S. ADP Reports Slower Payroll Growth
by:Tom Moeller
|in:Economy in Brief
The ADP/Moody's National Employment Report indicated that nonfarm
private sector payrolls rose 156,000 during April (2.0% y/y) following a 194,000
increase in March, revised from 200,000. The rise compared to an average monthly
increase of 198,000 in Q1 and 219,000 in Q4'15. It fell short of expectations
for a 200,000 rise in the Action Economics Forecast Survey. 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 ADP 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. Medium-sized businesses led last month's hiring slowdown with a 39,000 rise
(1.8% y/y) after a 66,000 increase. That was down from a 136,000 high back in
December 2013. Large business payrolls increased 24,000 (2.3% y/y), down from a
99,000 increase in September. Small business hiring held steady at 93,000 m/m
(2.1% y/y). The three-month pace of 86,000 was improved from 62,000 in
November. Service-industry hiring increased 166,000 (2.3% y/y), but the three-month
average of 188,000 was below the 212,000 average ending February. Payrolls in
trade, transportation & utilities industries rose a diminished 25,000 (1.6%
y/y) after a 41,000 rise. The number of professional & business services
increased a weakened 26,000 (2.6% y/y), after an 82,000 December gain. The
number of financial activities jobs rose 4,000 (1.8% y/y), compared to a monthly
high of 20,000 in February of last year. Hiring in the goods-producing sector of the economy slackened last month by
11,000 (+0.5% y/y). As recently as December, payrolls in the goods-producing
sector posted a 38,000 increase. Factory sector jobs declined 13,000 (-0.0% y/y),
the largest of the declines in the last three months. To the upside,
construction sector employment increased 14,000 (3.7% y/y), but that also was
easier than the 32,000 gain in December. The ADP National Employment Report data are maintained 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
Apr
Mar
Feb
Apr Y/Y
2015
2014
2013
Nonfarm Private Payroll Employment (m/m
chg, 000s)
156
194
207
2.0%
2.3%
2.2%
1.9%
Small Payroll (1-049)
93
93
71
2.1
2.6
2.1
1.9
Medium Payroll (50-499)
39
66
58
1.8
2.3
2.8
2.2
Large Payroll (>500)
24
35
78
2.3
1.7
1.6
1.5
Goods-Producing
-11
5
-1
0.5
1.8
2.4
1.8
Construction
14
18
26
3.7
4.5
4.7
3.7
Manufacturing
-13
-3
-11
-0.0
1.1
1.3
0.8
Service-Producing
166
189
208
2.3
2.4
2.2
1.9
U.S. Productivity Declines for a Second Quarter
by Tom Moeller May 4, 2016
Nonfarm output per hour during Q1'16 fell 1.0% at an annual rate (+0.6% y/y) following a 1.7% Q4'15 shortfall, revised from -2.2%. A 1.5% decline had been expected in the Action Economics Forecast Survey. It was the fourth productivity decline in the last six quarters. It occurred as a diminished 0.4% rise in output (+2.2% y/y) was outpaced by a 1.5% (1.6% y/y) rise in hours-worked. Productivity's decline was accompanied by a strengthened 3.0% rise (2.8% y/y) in compensation, the quickest rise since Q2. That combination of faster compensation growth and declining productivity raised unit labor costs 4.1% (2.3% y/y), the strongest gain since Q4'14. A 3.5% rise had been expected.
In the manufacturing sector, productivity rebounded 1.9% (1.5% y/y) following a 1.0% decline, revised from -0.7%. Output improved 0.7% both q/q and y/y, while hours-worked declined 1.1% (-0.8% y/y). Compensation growth weakened to 0.6%, but the y/y advance of 3.1% was the strongest since Q4'14. The combination of stronger productivity and weaker compensation growth caused unit labor costs to decline 1.2%, offsetting a little-revised 3.6% gain. That pushed y/y growth to 1.6%, below last year's 1.9% rise and 2.8% in 2014.
The productivity & cost figures are available in Haver's USECON database. The expectations figures are from the Action Economics Forecast Survey and are found in the AS1REPNA database.
| Productivity & Costs (SAAR, %) | Q1'16 | Q4'15 | Q3'15 | Q1'16 Y/Y | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | -1.0 | -1.7 | 2.0 | 0.6 | 0.7 | 0.8 | 0.0 |
| Compensation per Hour | 3.0 | 0.9 | 2.3 | 2.8 | 2.8 | 2.8 | 1.1 |
| Unit Labor Costs | 4.1 | 2.7 | 0.4 | 2.3 | 2.1 | 2.0 | 1.1 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | 1.9 | -1.0 | 3.7 | 1.5 | 0.2 | -0.1 | 0.7 |
| Compensation per Hour | 0.6 | 2.5 | 4.0 | 3.1 | 2.2 | 2.7 | 0.2 |
| Unit Labor Costs | -1.2 | 3.6 | 0.3 | 1.6 | 1.9 | 2.8 | -0.5 |
U.S. ISM Nomanufacturing Index and Prices Improve
by Tom Moeller May 4, 2016
The Composite Index of Nonmanufacturing Sector Business from the Institute for Supply Management (ISM) increased to 54.5 during March versus an unrevised 53.4 in February. It was the highest reading in three months. Consensus expectations had been for 54.1 in the Action Economics Forecast Survey. The ISM data are diffusion indexes where a reading above 50 indicates expansion.
Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure released Friday. It increased to 54.2, also the highest level in three months. For all of last quarter, the index fell to 53.3, the lowest level since Q4'11, from 55.9 in Q4'15. During the last ten years, there has been a 72% correlation between the index and the q/q change in real GDP.
Amongst the component series, the business activity reading jumped to 59.8, its highest level since October. The new orders reading gained to 56.7 and the employment index rebounded to 50.3. During the last ten years, there has been a 96% correlation between the employment index and the m/m change in service plus construction payrolls. The supplier delivery index rose to 51.0, indicating a modest slow down in delivery speeds.
The prices paid series improved to 49.1, but remained below break-even for the third consecutive month. Fourteen percent (NSA) of respondents paid higher prices while 9 percent paid less.
The export order series (NSA) jumped to 58.5, a 12-month high. The imports series retreated to 53.0 and the order backlog figure remained at 52.0 for a third straight month, down from a high of 56.5 last August.
The figures are available in Haver's USECON database. The expectations figure from Action Economics is in the AS1REPNA database.
| ISM Nonmanufacturing Survey (SA) | Apr | Mar | Feb | Apr'15 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 54.5 | 53.4 | 56.9 | 57.1 | 56.2 | 54.6 | |
| Business Activity | 59.8 | 57.8 | 59.0 | 60.8 | 59.7 | 56.6 | |
| New Orders | 56.7 | 55.5 | 58.3 | 59.2 | 58.6 | 55.8 | |
| Employment | 50.3 | 49.7 | 56.1 | 56.1 | 54.9 | 54.3 | |
| Supplier Deliveries (NSA) | 51.0 | 50.5 | 54.0 | 52.5 | 51.8 | 51.7 | |
| Prices Index | 49.1 | 45.5 | 50.7 | 50.7 | 56.8 | 55.7 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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