The ADP/Macroeconomic Advisors employment report released today did not bring glad tidings for Friday's official Labor Department report. The ADP report indicates that private, nonfarm employment dropped by 157,000 jobs in October—a much deeper cut than the 26,000 jobs ADP reports were shaved off payrolls in September. Job losses were spread across the goods-producing and manufacturing sectors as well as in the service-providing sector, which lost 31,000 jobs—the first decline in nearly six years, according to Joel Prakken, chairman of Macroeconomic Advisers.
A couple of expert takes:
David H. Resler, chief economist at Nomura Securities
Until now, the job cuts have occurred predominantly at medium and large-sized firms but in October, small businesses also cut employment for the first time in the history of this measure. Job cuts were heavily concentrated in the goods-producing industries with manufacturing accounting for 85,000 of the 126,000 jobs lost in those industries. Job losses have also spread into the services industries although the smallest firms in this sector added 11,000 workers to the payroll. These data, which do not include any of the Boeing lay-offs point to a very weak payroll employment report on Friday.
Goldman Sachs U.S. Economic Research
Over the downturn the ADP report has consistently pointed to fewer job losses than the BLS figures, by about 100k or a bit more for almost a year. Making that correction and allowing for some growth in government jobs the report is consistent with our forecast of a loss of 250k payroll jobs. In fact, it implies a bit of downside risk to that forecast.
Joshua Shapiro, chief U.S. economist at MFR
We are not altering our own estimate of -200K for total non-farm payrolls, and we similarly do not anticipate any changes to the median forecast.