TrimTabs Less Optimistic Than ADP on Payrolls Gains

As we noted earlier on Wednesday, it is the U.S. Department of Labor’s Employment Situation report that is among the most influential economic releases. Measuring the official unemployment rate and the monthly payrolls gains for the nonfarm and private sectors matters. Investors have been using the ADP Payrolls report, and a secondary report is the TrimTabs employment growth report, as a preliminary tool to judge and predict what the payrolls report will be. These are released about 48 hours ahead of the Labor Department’s report.

While ADP announced that private sector employment increased by about 217,000 jobs from October to November, the TrimTabs report was a more conservative 168,000. Bloomberg does not make projections on the TrimTabs report, but it was calling for 183,000 from ADP.

TrimTabs also reported that November’s growth in income tax withholdings fell to the lowest level of 2015. It makes its employment estimates from the daily income tax deposits to the U.S. Treasury from the paychecks of the 144 million U.S. workers subject to withholding. TrimTabs’ estimates are not subject to massive revisions in subsequent months. Wednesday’s report from TrimTabs said:

Real-time tax data indicates hiring cooled off in recent months. Job growth was below 200,000 for the third consecutive month. … Wall Street economists are in a pretty merry mood, but tax data, credit indicators, and our proprietary macroeconomic index suggest a Fed rate hike this month would be coming amid slowing economic activity.

For a comparison of variations in reports, the ADP official quote in its competing report said:

Job growth remains strong and steady. The current pace of job creation is twice that needed to absorb growth in the working age population. The economy is fast approaching full employment and will be there no later than next summer.

ALSO READ: The 100 Largest Private Companies in America

Even if you blend the ADP and the TrimTabs reports, the base case scenario should be for another relatively strong gain in November payrolls from the Bureau of Labor Statistics this Friday. Bloomberg is calling for 190,000 in nonfarm payrolls and 185,000 in private sector payrolls. The unemployment rate is expected to remain flat at 5.0%.