You don't even need to know the specifics to realize that today's economic reports were weak. All you need to know is that there was no mention of them in the Associated Press's list of Top 10 business stories as of 3:35 p.m. Among stories considered more important: a product review of Apple's tiny market-share program called iWork and three dozen passengers suing Carnival Cruise Lines.
This morning's release from ADP on February private-sector employment growth reported 139,000 jobs added; the previous four months were revised down by a total of 138,000. The Institute for Supply Management's Non-Manufacturing Index came in at 51.6%, showing relatively slow expansion (anything above 50% indicates expansion) compared to January's 54.0%. The reports missed expectations of 155,000 jobs added and 53.5%, respectively. AP coverage of these two reports somewhat understated their weakness, one quantitatively and the other qualitatively.
Christopher Rugaber's dispatch on the ADP report leaned heavily on report presenter Mark Zandi's statements in the conference call shortly after the report's release, except for one thing: He chose not to relay Zandi's description of the news as "somewhat disappointing." Rugaber also ignored most of the prior-period revisions, even though he asked Zandi a question about them during the call (bolds are mine throughout this post):
A private survey shows that U.S. companies added slightly more jobs in February than in the previous month, but harsh winter weather still weighed on hiring.
Payroll processor ADP said Wednesday that businesses added 139,000 jobs last month, up from only 127,000 in January. But January's figure was revised sharply lower from an original estimate of 175,000.
The data suggests that the government's jobs report for February, to be released Friday, will show only modest gains. Economists forecast it will show that employers added 145,000 jobs last month. That is below the average gains of nearly 205,000 jobs a month in the first 11 months of last year.
The ADP numbers cover only private businesses and often diverge from the government's more comprehensive report. In January and December its initial figures were much higher than the official count. The Labor Department said employers added 113,000 jobs in January and just 75,000 in December.
The other three downward revisions included the following:
- December went from 227K to 191K.
- November went from 289K to 245K.
- October went from 206K to 196K.
That's a combined 90,000 in reductions beyond January's 48,000 (175K minus 127K).
Josh Boak's AP report on the ISM index was reasonably measured, until he got to his selection of which respondent's comment to use:
U.S. service companies expanded more slowly in February as hiring levels declined in a cautionary sign for the economy coming out of winter.
The Institute for Supply Management said Wednesday that its service-sector index fell to 51.6 from 54 in January. Any reading above 50 indicates expansion.
But the harsh winter weather posed challenges. The real estate, retail, hotel, food services and construction industries all contracted last month. And a measure for hiring plunged 8.9 percentage points to 47.5, evidence that many companies shed workers. It raises concern that the February jobs report the government will release Friday could disappoint.
"Risk of a Friday shock has risen," concluded Ian Shepherdson, chief economist for Pantheon Macroeconomics.
The trade group's survey covers businesses that employ 90 percent of the workforce, including retail, construction, health care and financial services firms.
... Despite the downturn in employment, measures for new orders and production in the index both point to continued expansion.
"Economy still plugging along, but at a very slow rate of growth," said one firm interviewed for the survey.
The problem isn't the comment Boak quoted. It's the one he ignored.
"Health Care and Social Services" was among the categories in contraction in February. Until recently, health care was one of the few bright spots in a largely lackluster recovery. Now it's not. I wonder why?
One respondent quoted in the ISM report relayed their view, and quite strongly. Here's that person's statement, one which I believe Boak should have quoted:
"The Affordable Care Act is creating significant financial uncertainty to healthcare organizations. With little warning, the negative impact on revenue has been unprecedented."
AP's quick removals of its stories about these reports from the highlight reel probably mean that you won't hear or see much about them in tonight's TV broadcasts. That's not an accident.
Cross-posted at BizzyBlog.com.