Each and every month, the financial markets and the media get all hot and bothered to report the U.S. Department of Labor’s Employment Situation report. This measures the official unemployment rate, but it also tracks the number of total nonfarm and total private sector payroll gains. It is the payrolls numbers that really matter here to the markets the most. In particular the private sector payrolls matter the most, as government jobs require taxes from those private jobs to be in place.

Each month’s Bureau of Labor (BLS) report is given a 48-hour preview by the ADP Employment Report. This number has been quite volatile in the past, but what this report has been doing more accurately of late is offering a directional bias to the BLS report on private sector payrolls.

Last week’s ADP report showed that there was a significant softening in October, and this was later confirmed in Friday’s BLS private sector payrolls. The October private sector payrolls was 147,000, significantly under the 170,000 consensus from Bloomberg and worse than all estimates in the Econoday range of 150,000  to 175,000.

That 147,000 telegraphed for October also was made to look even worse after ADP’s September estimate of 154,000 was revised to a much higher 202,000.

What happened on Friday, November 4, was that the total nonfarm payrolls came in at 161,000. Bloomberg and others were calling for just over 170,000. The real issue is that the private sector payrolls was down at 142,000, because there were 19,000 hires in federal, state and local government jobs. Again, those government jobs require private sector jobs to pay taxes to pay for them in theory.

Friday’s BLS data confirmed what ADP said as well with higher revisions in September. Total nonfarm payrolls were revised to 191,000 from 156,000, and the private sector payrolls were revised to 188,000 from 167,000. ADP, while it was not known exactly at that time, confirmed all of this data for a weak jobs report in payrolls growth for October and a higher revision for September some 48 hours ahead of time.

The ADP national employment report is tallied up by ADP using a subset of ADP’s actual client records. This represents roughly 400,000 U.S. businesses and covers roughly 23 million U.S. employees who work in the private sector.

It is important to at least acknowledge that the election stress has been at a minimum magnifying some of the economic weakness of late. The media keeps jamming political agendas (yes, really) and the public is fixated entirely on which candidate they do not want running our country for at least the next four years. On top of that, there may be a majority of the voters who are supporting one candidate as the less of two evils, not because they like the candidate they will vote for. In the end, that has to be wrecking part of the economic tea leaves that economists and fortune tellers have to read.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.