According to ADP payroll processing U.S. private employers are estimated to have added 263,000 jobs in March. This is likely more than the number employers hired in February and well above economists’ expectations. This is the largest anticipated job growth in the past two years.
The earlier forecast by ADP National Employment Report estimated growth of 187,000 jobs, with median-range economic estimates spanning 110,000 to 225,000. The current report is jointly developed with Moody’s Analytics.
The U.S. Labor Department’s more comprehensive non-farm payrolls report comes out on Friday and will include both public and private-sector employment. Economists polled by Reuters were looking for U.S. private payroll employment to have grown by 175,000 jobs in March, less than the 227,000 in February – so the 263,000 estimate has caught them off guard. The ADP results are much stronger (100,000 more) than anticipated.
That said, the unemployment rate is forecast to stay the same at 4.7 percent despite more than 100k jobs above the 150k number needed to absorb inbound new workers.
This means approximately 100k of the new job hires are people who were previously not considered to be “unemployed”, or recorded in the unemployment stats. In short, people are going back to work who had dropped out of the labor force.
We have continued to outline a “new dimension” in American economics which is resulting from President Trump’s focus on main street economic priorities within his economic policies. Modern economists are perplexed with the main street impacts because they are generationally focused on economic policy benefiting Wall Street.
Trump has uncoupled the Main Street economic engine from Wall Street policy; and as a direct result the traditional metrics are incapable of quantifying economic growth. This report from the Associated Press provides an example of the cognitive disconnect:
[…] The data also indicates that hiring remains strong even though growth appeared to slow in the January-March quarter. Many economists estimate that the economy grew at roughly a 1 percent annual rate in the first three months of the year. That would be half the 2.1 percent pace in last year’s fourth quarter.
The ADP report “is clearly another indication that, despite the apparent slowdown in GDP growth in the first quarter, labor market conditions have remained unusually strong,” Andrew Hunter, U.S. economist at Capital Economics, a forecasting firm, said. (link)
A perfect encapsulation of our prior predictions. Main Street GDP is expanding under President Donald Trump – actual stuff, preparatory stuff, to build other stuff (end products) is getting built. This is the hidden and unquantifiable infrastructure cycle of a manufacturing economy being restarted.
Before you can make the stuff, you first have to assemble the capability to create the stuff. In the infrastructure of manufacturing assembly cycle, economic activity (expenditures, payrolls, investments, purchases) are being made that are not quantified under traditional GDP measures.
The quantifiable economic tools are geared toward measuring a service industry economic model. Only the end product activity is measured within that modern GDP equation. Current economic statisticians are incapable of quantifying the new GDP because their analytic tools are geared toward Wall Street measures and do not quantify the investment expenditures as part of the GDP growth.
Those who quantify economic activity, cannot see the economic activity that is driving the jobs growth in this pre-manufacturing resurgence and investment cycle.
I hope that explainer makes sense….
