{"id":960,"date":"2017-03-08T11:09:06","date_gmt":"2017-03-08T16:09:06","guid":{"rendered":"http:\/\/naroffeconomics.com\/?p=960"},"modified":"2017-03-08T11:09:06","modified_gmt":"2017-03-08T16:09:06","slug":"february-private-sector-jobs-and-help-wanted-online","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=960","title":{"rendered":"February Private Sector Jobs and Help Wanted OnLine"},"content":{"rendered":"

KEY DATA:<\/u><\/strong> ADP: +298,000; Construction: 66,000\/ HWOL: -360,2000<\/p>\n

IN A NUTSHELL:<\/u><\/strong> \u00e2\u20ac\u0153If job gains are really heating up this much, the Fed might find itself behind the curve and having to catch up.\u00e2\u20ac\u009d<\/em><\/strong><\/p>\n

WHAT IT MEANS:<\/u><\/strong> A strong employment number on Friday could cement a Fed rate hike next Wednesday and it looks like that could happen. ADP\u00e2\u20ac\u2122s estimate of February private sector job gains was off the charts,<\/em><\/strong> or at least well above anyone\u00e2\u20ac\u2122s expectations. The rise was led by a surge in construction jobs that was the second largest since the report was first released fifteen years ago. <\/em><\/strong>The only time there was a greater increase was at the peak of the home construction boom and we know that is not happening right now. The incredibly warm February weather across much of the nation may have played a major role in this outsized estimate.<\/em><\/strong> There was also a huge rise in manufacturing payrolls. That doesn\u00e2\u20ac\u2122t seem to be weather driven, but the gain was the third highest in this measure\u00e2\u20ac\u2122s history. Why the sudden surge in hiring, especially given the shortage of workers, is unclear.<\/em><\/strong>\u00c2\u00a0\u00c2\u00a0 It raises questions about whether this is the start of a greater hiring trend or just a seasonal adjustment anomaly. Regardless, it is really nice to see.<\/p>\n

Another reason that I am cautious about the ADP report was the large decline in the number of online ads, as reported by the Conference Board. The level was the lowest in almost five years and every major state reported a drop.<\/em><\/strong> There are a number of divergent reasons for the nearly steady decline that has been going on for fifteen months. First, labor demand may simply be slowing, as the economy hasn\u00e2\u20ac\u2122t grown particularly robustly. The second is that firms are recognizing that in this labor shortage environment, they cannot fill a lot of the openings so they are cutting back on their advertising. Actually, a combination of the two could be occurring. That would argue for slow job gains. Alternatively, firms may actually be finding workers all those workers they are saying they cannot find and filling the openings. That would argue for strong job increases. We may not know for a few months which explanation reflects reality.<\/p>\n

The Labor Department released revised productivity data for the final quarter of 2016 and it was depressing. Productivity increased in 2016 by the slowest pace since 2011.<\/em><\/strong> It is hard to grow rapidly, especially with businesses having so much trouble finding \u00e2\u20ac\u0153qualified\u00e2\u20ac\u009d workers, if firms cannot get a lot more out of current workers. Indeed, if we do get a surge in payrolls this quarter, as the other data imply, productivity will likely start of the year on a down note.<\/p>\n

MARKETS AND FED POLICY IMPLICATIONS:<\/u><\/strong> Friday we will get the February payroll and unemployment government data and they should be good.<\/em><\/strong> Every once in a while, ADP and the Labor Department differ significantly in their estimates of private job gains, so it is unclear how big a number we will get. But if the employment increase exceeds 200,000 and wages rise solidly, as expected, a Fed rate hike should be assumed. I never say \u00e2\u20ac\u0153done deal\u00e2\u20ac\u009d when it comes to the Fed, but a strong report would get us pretty close to one. <\/em><\/strong>And it would reinforce the warning that I have been making that rates could rise faster and go higher than the markets currently anticipate.<\/p>\n

I am headed out on my annual father\/son Phillies spring training trip, so I will not be around for what may be a fun morning on Friday. Buckle up, everyone. The only roller coaster I will be riding will be in Islands of Adventure.<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: ADP: +298,000; Construction: 66,000\/ HWOL: -360,2000 IN A NUTSHELL: \u00e2\u20ac\u0153If job gains are really heating up this much, the Fed might find itself behind the curve and having to catch up.\u00e2\u20ac\u009d WHAT IT MEANS: A strong employment number on Friday could cement a Fed rate hike next Wednesday and it looks like that … Continue reading February Private Sector Jobs and Help Wanted OnLine<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-960","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/960","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=960"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/960\/revisions"}],"predecessor-version":[{"id":961,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/960\/revisions\/961"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=960"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=960"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=960"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}