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ADP Private payroll came in today, beating expectation by 5,000 jobs at 178,000. The big surprise came when ADP revised the month of June higher by 35,000 to 191,000. The BLS gets its chance to report on Friday morning at 8:30, analysts are currently looking for 178,000 jobs created in July. Predicting the BLS data is anyone’s guess, but it is fun to try. My models suggest that consensus may be too low.
BLS Trending Lower
The chart above has been converted to y/y percentage changes to help us smooth the data out and get a clear view of the trends. The chart is demonstrating the down trend with the red straight lines. The private payroll numbers broke that downward trend around the start of 2017, but to this point it is uncertain the same has finally happened with BLS.
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For there to be 177,000 jobs created in June, there needs to be a 1.47 percent increase in the number of people work versus July 2016 in the non-farm payroll population.  It would also mean that the BLS will continue to fewer jobs created into the future. Also, it would create the largest spread between the ADP and BLS y/y percentage changes the widest in 5 years.
Consensus Too Low
For the best chances of the BLS breaking the downward trend, the BLS report needs to come in at or above 234,000 jobs created in July. From looking at the pattern, and the spread, it is my belief that the recent consensus numbers are likely too low, and we could see a number of 234,000 created in July.
We’ll have to wait and see come Friday.
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.