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Musing About The Jobs Reports - The New ADP Report May Be Worthless

Most know my attraction to jobs, and the dynamics to create jobs. The revision to the ADP jobs report saddens me. Now we have two jobs reports - one real, and the other trying to guess what the real report will say.

We no longer have a check and balance.

As a major project construction manager, i monitored progress using completely independent systems. Yes, they provided different answers - but it was my job to sort out the likely truth. When one has two reports with the first trying to forecast the second you really have only one report.

Sorry ADP, but it is likely your new report is worthless. I hope I am wrong.

The Econintersect economic forecast for November 2012 showed barely moderate growth, but the underlying data used to forecast was very mixed. To use a technical term - the data was wacky, and as an analyst leaves me with an uncomfortable feeling. However, the good data was stronger than the bad data, and our alternate forecasting tools validated our forecast.

ECRI is still insisting a recession is here (a 07Sep2012 post on their website). ECRI first stated in September 2011 a recession was coming . The size and depth is unknown. The ECRI WLI growth index value is enjoying its tenth week in positive territory. The index is indicating the economy six month from today will be slightly better than it is today.

Current ECRI WLI Growth Index

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Initial unemployment claims fell slightly - from 369,000 (reported last week) to 363,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here). The real gauge - the 4 week moving average - also declined slightly from 368,000 (reported last week) to 367,250. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.

Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2010 (blue line), 2011 (red line), 2012 (green line)

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Data released this week which contained economically intuitive components (forward looking) were:

  • Rail movements (where the economic intuitive components indicate a moderately slightly expanding economy).

All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.

Weekly Economic Release Scorecard:

BLS Jobs Report for October 2012
American Presidency: Is It a Joke?
Stocks Extended Relative to Declining Jobless Claims
Buy and Hold is So Last Century
Volcano Power Coming to U.S.
No Small Business Hiring Spike Seen by NFIB
International Economic Trends: Europe Slides Into a Recession
Rail Week Ending 27 October 2012: Rail Without Coal Expands
Japan Can Again Become the Land of the Rising Sun
CoreLogic Reports Homes Lost to Foreclosure Decline in September 2012
October 2012 Conference Board Consumer Confidence Improves
October 2012 ISM Manufacturing Survey Improves Marginally
September 2012 Private Construction Has A Good Month
Productivity 3Q2012 (Preliminary): Productivity Increased at 1.9%
ADP Infographic of their October 2012 Jobs Report
October 2012 ADP Jobs Up 158,000
27October2012 Unemployment Claims: Four Week Average Down Slightly
Challenger October 2012 Job Cuts Increase to 5 Month High
Infographic of the Day: Americans Do Not Use Vacation Time
Where is Inflation Heading?
New ETN: High Yield with High Risk
China: Manufacturing Returns to Growth
Big Changes Coming to the ADP Employment Report Tomorrow
Pictures: Hurricane Damage in New York
Economic Forecast November 2012: Still Predicts Moderate Growth but…
Households and the UK Recovery
Conference Board Reports Help Wanted OnLine Weakens Again in October 2012
Employment Costs Moderate Increases Continue in 3Q2012
Chicago Purchasing Managers Barometer Still Showing Contraction in October 2012
Infographic of the Day: Startup Salary Compensation
What Sandy Has Left for the Week Ahead
Delayed Reaction: Japanese Stocks Up
The Anti-European Sinn
2.1 Million Bulge in Post High School Enrollment Since Great Recession
Too Big to Fail is a Red Herring
Average Gasoline Price Falls $0.118 Week Ending 29 October 2012
September 2012 Philly Fed Leading Index Projects Positive Economic Growth
Housing Vacancy Rates Improve in 3Q2012
Flash: Conference Board Delays Issuing Consumer Confidence Index Due to East Coast Hurricane
Case-Shiller Home Prices Increase 2% Year-over-Year in August 2012
Infographic of the Day: History of Business Telecommunications
Stratfor: U.S. Presidential Elections in Perspective
Looking for Short-Term Market Direction
London Gold Trading Surges
French Mortgage Credit Crash Promises No Good
New York Stock Exchange: Second Two-Day Weather Related Closing Since 1885
Insider Trading 26 October 2012: BlackRock Director Makes Large Purchase
Hurricane Sandy Smashes Over 800 Miles of Coastline
Texas Manufacturing Continues to Expand in October 2012
September 2012 Real Personal Income Is Unchanged
Next Crash Will be Bigger than Black Monday
Lloyds is Catching On
Trade-offs Between Inequality, Productivity, and Employment
Trading Analog Patterns
Seven Market Movers
Imbalances, Disequilibria and Correlation Traps
The Week That Was: 27 October 2012
Cyberbullying: How to Stop Bullies in the Digital Age
Has Global Warming Ended?
Trefis: Highlights Week Ending 26 October 2012
Gains in Employment Likely As Good As It Gets?
Pharma Stocks: Hot Again
Gold Cycle “Following The Script”
GDP Report: Improving Growth or Continued Weakness?
Final October 2012 Michigan Consumer Sentiment Down but Remains at 5 Year High

Bankruptcies this Week: First Place Financial, Bionovo

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.