What About the Revisions to the data?
The ADP Payroll report is released the Wednesday prior to the monthly government Employment Situation Report. The headline ADP number is the seasonally adjusted payroll gains or losses. The headline Employment Situation number is the Non-Farm Payroll (NFP) number. The NFP data includes both private sector workers and government workers. This causes a difference to happen between the two headline numbers.What can we expect from the ADP Payroll Report for February 2019?
Expect revisions to the data from prior years, plural. Last year there were major revisions to the Employment Situation data with the release of the January Jobs Report. That was followed by significant revisions to the ADP data with the release of their February Report. The ADP payroll shifted from a January 2018 payroll growth rate of 2.27% to a growth rate of 1.74%. Instead of growth accelerating, ADP Payroll growth was slowing. It was still growing, not contracting. This past month there were significant revisions to the Current Employment Statistics (CES) worker data with the release of the January Government “Jobs Report. Data from 2012 through 2016 was revised higher while data from 2017 and 2018 were revised lower than last reported. Will we see revisions back to 2012? Will we see upward revisions to the Professional Business Services (PBS) and downward revisions to the Trade, Transportation, and Utilities (TTU) Sector data as we did with the CES worker data? Time will tell.
Rolling Year growth is trying to break through the 2.00% growth level. It should do so this month. The most likely range of growth for the entire payroll is between 1.91% and 2.00%. Last February we grew at 1.77%, after the revisions. There is roughly a 50-50 chance that we will grow or falter from the 1.94% that we achieved during January of this year. This means that we should see between 213,000 and 327,000 payroll positions added this month.
The February to February data is projecting seasonally adjusted payroll growth in all sectors. The sector that had been languishing has being the Information (IT) sector. This year it looks like all sectors should grow their payrolls. The largest growth, February to February, should be in Natural Resources (NR,) Construction, PBS, Education and Health Services (EHS,) and Leisure and Hospitality (LAH.)
Month to Month growth is looking to improve from the 0.17% achieved last month. The data is indicating that the seasonally adjusted ADP Payroll growth should be between 0.17% and 0.21%. Normally February has a slightly higher growth rate than January. January grew at 0.17%. If we grow between 0.17% and 0.21% then the actually seasonally adjusted value is between 231,000 and 269,000 private sector workers. There is one hundred percent overall agreement in the 231,000 to 269,000 worker range. The 213 value indicates that we should expect something closer to 231,000 than 269,000.
Month to month growth is anticipated in all sectors, seasonally adjusted. The largest growth rates are expected to seen in NR, Construction, PBS, Manufacturing, and IT. There is significant overlap in the month to month and February to February growth for NR, Construction, and Professional Business Services. This means good data should be reported for average wage growth this month.The growth in LAH and EHS could be a drag on the wage growth.
If we see data revisions to the prior data the impacts on the current month’s data could be significant. If the data from 2018 is revised higher, if the data from 2012 through 2018 is revised higher, then the data from 2019 will have a higher starting point. This means that last month’s 213,000 workers added could be revised up by 33,000 to 246,000, and that this months 231,000 could be reported lower by 33,000 or 198,000. If January is revised lower by 33,000 then this month would be boosted by 33,000 workers. Watch the revisions.
The data, pre-revisions, points to a potentially strong February ADP report. All sectors should grow month to month and February to February. Expect a number reported between 213,000 and 236,00, or roughly 225,000 workers added during February. There is the possibility for a very strong February ADP report, possibly higher than last year’s 241,000 and pushing up to 300,000.
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Categories: Economic Forecasts