Mish's Global Economic Trend Analysis |
- ADP Grossly Overstates Job Growth for Last 12 Months by 419,000 Jobs
- Canada GDP "Unexpectedly" Shrinks; Pollyannas Come Out Of Woodwork
- "Google Law" Yet Another Warped Policy by Hollande; Government Motors French Style
| ADP Grossly Overstates Job Growth for Last 12 Months by 419,000 Jobs Posted: 31 Oct 2012 02:53 PM PDT ADP has announced revised methodology to "enhance" its monthly job reports, no doubt because its prior numbers simply were grossly inaccurate. Indeed, I stopped commenting on ADP numbers because I thought they were absurd. Let's take a look at their revised methodology. Here is the ADP Jobs Report for September using the revised methodology. "Private sector employment increased by 88,200 jobs from August to September, according to the September ADP National Employment Report®. The report, which is derived from ADP's actual payroll data, measures the change in total U.S. nonfarm private employment each month on a seasonally adjusted basis. Last month's employment estimate was revised down from 80,000 to 76,400 jobs."Please note that last sentence. Compare to what ADP actually reported last month: "Employment in the U.S. nonfarm private business sector increased by 162,000 from August to September, on a seasonally adjusted basis. The estimated gains in previous months were revised lower: The July increase was reduced by 17,000 to an increase of 156,000, while the August increase was reduced by 12,000 to an increase of 189,000."Got that? September private business sector increased by 162,000 but now we see September was revised down to 76,400 from 80,000 (not 162,000 as actually reported). Revision Matching Check out this statement from ADP FAQs. Using this methodology developed for ADP by Moody's Analytics, our adjusted historical ADP National Employment Report data dating back to 2001 has a 96 percent correlation with the revised BLS numbers. ADP revisions match BLS revisions over time. Lovely. Spotlight on Revisions ZeroHedge totaled up the ADP revisions for 2012 and concluded ADP "Cancels" 365,000 Private Jobs Created In 2012. I conclude the same thing. However, things are even worse than Zerohedge states. Here is a chart that I put together of ADP revisions. Note: numbers in charts and tables in thousands. ADP Original Vs. ADP Revised Monthly Job Gains or Losses  click on chart for sharper image ADP was way underestimating job gains in 2011 and way over-estimated gains in 2012. The net effect was 136,000 jobs over 20 months (about 6,800 per month). However that is a very misleading way of looking at things as the following table shows. Time Period Analysis
As you can see, I match ZeroHedge for 2012. However, for the last year, ADP was off by an even higher 419,000 jobs, nearly 35,000 jobs a month for an entire year! For 2011, ADP was off in the other direction by 229,000 jobs, roughly 19,000 per month. Here is the complete table that I worked from. ADP Data Points Table
I note with amusement TrimTabs Says BLS Badly Missing Current Acceleration in Job Growth TrimTabs Investment Research said today that the Bureau of Labor Statistics' (BLS) hefty upward revision of its August job growth estimate proves that the BLS missed the important acceleration in job growth this summer because it relies on incomplete surveys that are frequently revised.I did not buy that story then, and I do not buy it now. More than likely, the BLS was catching up to misses earlier in the year, perhaps even 2011 vs. a genuine recent hiring spurt. Obamacare Employment Analysis I am sticking to what I said regarding Obamacare, especially Obama Slashes Four Hours Off Definition of "Full-Time" Employment Additional Obamacare Employment Analysis
By the way, these ADP revisions suggest the stated unemployment rate is blatantly preposterous, something I say in every jobs report. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More  Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. 
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| Canada GDP "Unexpectedly" Shrinks; Pollyannas Come Out Of Woodwork Posted: 31 Oct 2012 11:21 AM PDT Economists who cannot see anything but the rear view mirror were surprised to learn Canadian Economy Shrinks as Oil, Mining Slump. The Canadian economy shrank unexpectedly in August, pointing to a sharp third-quarter slowdown in growth from the first half and reinforcing the Bank of Canada's message that interest rate hikes are less imminent.Pollyannas Come Out Of Woodwork BMO and Scotia Capital analysts may be late to the recession party (or not, I do not know previous calls), but otherwise, Pollyannas like Jim Flaherty, Canada's Finance Minister, and officials at the Bank of Canada and Statscan are still looking for growth. Forget about it. This is not an anomaly as suggested by the Bank of Canada. As I have said repeatedly, the slowdown in Asia is going to hit Canadian commodity producers more than most think. Moreover, signs suggest Canada's long overdue housing bust is finally underway according to the Canadian Real Estate Association Report on October 15. Here is the key item: Actual (not seasonally adjusted) activity is down 15.1 % from year-ago levels, with more than half of all local markets posting declines of at least 10 per cent. The rest of the report staked out a claim that real estate was "balanced", I maintain in the same way that spinning plates in this video can be stated as balanced. With the US economy slowing, with Asia slowing, and with Europe in a full-blown recession, the odds of Canada and the US bucking the trend is essentially zero. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. 
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| "Google Law" Yet Another Warped Policy by Hollande; Government Motors French Style Posted: 31 Oct 2012 09:14 AM PDT French president François Hollande took two more swan dives into the pool of ludicrous actions in the past few days, first with car-maker Peugeot, quickly followed up with a guaranteed-to-fail proposal regarding search engine giant Google. Government Motors French Style Bloomberg reports France Guarantees Peugeot Debt in Exchange for Influence The French government stepped in to rescue PSA Peugeot Citroen (UG), Europe's second-largest carmaker, by guaranteeing as much as 7 billion euros ($9 billion) in new bonds in exchange for greater influence over company strategy.Sheer Madness I would like to point out how ridiculous this action is, but Pater Tenebrarum at the Acting Man blog beat me to it. He did a first-class job of making Hollande look foolish in his post Peugeot Bailed Out, More Trouble for the Banks. The government and workers will receive board seats? Are they sure this is going to work out? We believe that this latest socialistic experiment is highly likely to turn into a bottomless pit for France's tax payers."Google Law" Another Sign of Hollande's Warped Mind That piece by Tenebrarum is a tough act to follow. Nonetheless, please consider the Wall Street Journal article France Calls On Google to Settle Rift With Publishers France will consider adopting legislation that would force Google Inc. GOOG to pay for the right to cite news articles online if the U.S. search giant fails to settle a long-running dispute with French news publishers over how to share advertising revenue, the office of France's President François Hollande said on Monday.Do A Search For Anything Just so you know what we are talking about here, please do a Google search for anything. Hurricane Sandy is as good a topic as any. Here is an image of the results.  Imagine Boston.Com, Bloomberg, the Washington Post, and the Weather Channel all demanding Google share add revenue with them for any ad that appears in those search results. While you are at it, imagine me demanding ad revenue sharing for those doing a Google search for Mish. Many people find me that way. "Mish" is my brand, and I appear at the top of any such search. Here is an image of a search for Mish.  Instead of getting some ad revenue when people click on links to French news articles, there will be no links to click on at all if Hollande does what he says (and Google responds the way they have said). Hollande wants to help struggling newspapers, struggling car makers, struggling students, all with ludicrous actions on top of massive tax hikes. He even wants to ban homework because "It's Not Fair to Disadvantaged". On June 8, I reported Hollande About to Wreck France With Economically Insane Proposal: "Make Layoffs So Expensive For Companies That It's Not Worth It" It should be easy enough to guess the company that triggered that last bit of layoff-insanity, but in case you misplaced your thinking cap, the answer is Peugeot. Prepare for the implosion of France, because it is nearly certain with Hollande at the helm. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. 
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