The US Data is in… How Do You Interpret It?

The ADP report released today showed that private-sector payrolls were up 325,000 in December, led by the service-providing sector and small businesses. The November level was slightly revised downward to 204,000 from an estimate of 206,000. Markets look to ADP’s report on private-sector payrolls to provide some guidance on the U.S. Labor Department’s jobs estimate, to be released tomorrow which includes information on both private- and public-sector payrolls.

However, analysts have noted seasonal-adjustment issues that have led to past ADP estimates for December substantially missing the government’s data. Economists polled by” Market Watch” expect the Labor Department’s report tomorrow to show strengthening employment, with overall nonfarm payrolls up 150,000 in December, compared with 120,000 in November.

Economists also expect the unemployment rate to rise to 8.7%. The US unemployment figures will be release tomorrow as well.

Overall, the reports show that there is the promise of a recovery. Combining this with earlier data on the automobile industry, there seems to be positive note in manufacturing and hiring.

The downside of this week’s reports is beginning to come from the retail sector, reports and releases are beginning to show that retailers had a remarkable end of November with Black Friday and Cyber Monday, which was generated in part by pent up demand and earlier shoppers getting their shopping done with the best deals early. Figures are beginning to show that December was a very slow month for retail and that the only with the last minute aggressive bargains and sales did customers open their wallets.

Sales were increased in the last few days at the sacrifice of profit.

Target Corp. has just reported their holiday figures. As reported in Market Watch,  Target Corp.TGT -4.00% said on Thursday that its December same store sales rose 1.6%. Analysts had expected same-store sales to rise 3.1%, according to a Thomson Reuters poll. Total December sales were $10.14 billion, up 2.6% from a year ago. “December sales were below our expectations as growth in Grocery and Beauty offset softness in Electronics and Music, Movies & Books,” Target CEO Gregg Steinhafel said in a press release. Target also trimmed its fourth-quarter earnings outlook to $1.35 to $1.43 a share from a previous $1.43 to $1.53 a share.

This is the same message being heard throughout the US from major retailers with the major exception of Sears-Kmart, who had a drop in sales and profits and announced the closing of 120 stores.

J.C. Penney Co. JCP -5.44% dropped 10% on today after the company posted same-store sales results and said it would report a fourth-quarter loss of 30 cents to 45 cents a share. The company said the loss would include 50 cents to 55 cents a share in restructuring and management transition charges.  December same-store sales grew 0.3%, while total sales for the month fell 2.3%.

Whereas Nordstrom, TJX and Ross stores all reported increases in sales of up to 9%. TJX also announced a 2-1 stock split due to increased sales in December. While Macy’s has upped their guidance for December.

The fact that many economists were predicting slow sales or negative sales in December, these reports also support a slow turn around in the economy and in consumer spending.  The sacrifice of profit is hurting the bottom line of many of the retailers.

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