Rob Carnell, Chief International Economist at ING, suggests that the latest ADP survey posted a respectable 205k gain on the previous month, which tallies quite well with the consensus expectation for a payrolls figure of about +200k.
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Unfortunately, the ADP survey is not all that reliable, and the non-manufacturing ISM (which posted a sharp dip in the employment index has almost no value as a directional indicator of payrolls) and we probably need to think a little further than the run of hi-frequency information.
Towards the end of last year, there was plenty of anecdotal evidence of rapid hiring. This was not exactly panic hiring, but it did seem to be up a couple of notches up from previous months. Was there a scrabble to get people onto the books before the end of the year? Certainly the temporary help supplied jobs in December were up sharply.
It could be that December was an aberration, not the beginning of a new trend, and that would certainly be in keeping with the run of other data since then. If so, then we might expect this month or next to provide some payback to take us back to whatever the true underlying trend of jobs growth is. If the trend is closer to 250k than 300k, then we might need to see payrolls come in close to the consensus 200k.
But equally, trend payrolls was closer to 200k before the 4Q15 pick-up, and if this is where genuine labour demand lies, then it will require a figure closer to 150k to bring hiring back into line.
The jury is still out with respect to what exactly is happening to US demand. Labour market trends will respond only with a lag to changes in activity, and may continue to run strong for some months even if we are facing some slowdown in activity.”
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