The ADP national payroll report for August suggests private payrolls in the U.S. added 177,000 new jobs. The 177,000 gain for August is less than what we saw in July, which was revised upward to an estimated 194,000.
We pay attention to this report because it tends to suggest what we might see from the monthly jobs report from the Bureau of Labor Statistics. The ADP report, released this morning, typically comes out the Wednesday before the Friday release of the jobs report.
Last month’s BLS jobs report showed an initial estimate of 217,000 jobs were added for July, somewhat higher than the revised ADP estimate. In general, the ADP estimates follow a similar trend as the national payroll report, though the estimate in any one month may be off substantially.
The takeaway is that the ADP report suggests that the private payroll number we see Friday from BLS is likely to be a good number, and that the overall trend in job creation remains solid. This is consistent with the low level of weekly initial claims for unemployment insurance. The results also support our view that the U.S. consumer is likely to continue to be the driver of growth for the U.S. economy.
For the manufacturing sector, the Chicago Purchasing Managers’ Index released this morning was a bit weaker than expected, coming in at 51.5, down from 55.8 in the prior month. For this index, 50 is neutral, with readings above 50 indicating expansion, and readings below 50 suggesting contraction.
The Chicago PMI is viewed as an early gauge for the national Purchasing Managers Index from the Institute for Supply Managers (ISM). That report will be released tomorrow. The ISM report is a broad measure of activity for the manufacturing sector. Like the Chicago PMI, 50 is neutral. The ISM PMI had fallen below 50 in the fourth quarter of 2015, but has been trending higher in 2016, posting 5 consecutive months above 50. A rebound in manufacturing would be a positive development for real GDP growth in the second half of 2016.
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