RDQ: No improvement in employment numbers

** ADP employment fell 23,000 in March, weaker than consensus expectations. February ADP employment was downwardly revised to -24,000 from an initially reported -20,000.

** Service-producing employment rose 28,000 in March (the second consecutive gain), however, employment in the goods-producing sector dropped 51,000. Manufacturing employment declined 9,000 in March, construction employment dropped 43,000 (the smallest decline since July of 2008) and financial services jobs fell by 8,000.

** The ADP noted “Since employment as measured by the ADP Report was not restrained in February by the effects of inclement weather, today’s figure does not incorporate a weather-related rebound that could be present in this month’s BLS data. In addition, today’s figure does not include any federal hiring in March for the 2010 Census. For both these reasons, it is reasonable to expect that Friday’s employment figure from the BLS will be stronger than today’s estimate in the ADP National Employment Report.”

BOTTOM LINE: The decline in ADP employment in March compares to an average monthly drop in the prior three months of 85,000. However, this report (unlike jobless claims, regional manufacturing indicators, and the employment components of consumer confidence) does not suggest improvement in underlying job creation between February and March and, therefore, presents some downside risk to our forecast for nonfarm payrolls. Nonetheless, March nonfarm payrolls are likely to be driven more by a weather-related rebound and Census hiring, neither of which affect ADP employment.

Source: RDQ Economics


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