Expectations for tomorrow’s employment report sour even though most indicators through the report’s March 16 cutoff remained unchanged compared to the prior month. February showed a 246,000 payroll increase, yet tomorrow the market only expects a 195,000 gain. While ADP and Challenger reports (see March 3 & 4) have warned of weakness, jobless claims remain unchanged from February through March 16. Furthermore the index’s 4-week average hit its best level of the recovery in March. ISM Manufacturing increased employment (+1.6 to 54.2) while its service counterpart showed a small decline (-3.9 to 53.3), however both indexes remain above the employment-growth-level of 50.
February’s ADP estimates missed the actual payrolls report by 48,000 last month and was consequently revised higher by 39,000 yesterday. Another miss like that indicates +206,000 private payrolls tomorrow. While shoddy at best, this thinking suggests that there have been no substantial declines in economic activity since February’s 246,000 private payroll gain, therefore tomorrow’s reading should be closer to February’s gain rather than the market’s lowered expectations.