ADP, which typically sends out a private employment report just days before the official employment summary from the Bureau of Labor Statistics, predicted a massive employment surge for December, with private payrolls increasing by 297,000.
Private-sector employment increased by 297,000 from November to December on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from October to November was revised down but only slightly, from the previously reported increase of 93,000 to an increase of 92,000.
This month’s ADP National Employment Report suggests nonfarm private employment grew very strongly in December, at a pace well above what is usually associated with a declining unemployment rate. After a mid-year pause, employment seems to have accelerated as indicated by September’s employment gain of 29,000, October’s gain of 79,000, November’s gain of 92,000 and December’s gain of 297,000. Strength was also evident within all major industries and every size business tracked in the ADP Report.
Keep in mind that public-sector jobs are not included in the ADP report, and that there is often a lot of discrepancy between ADP and the BLS survey. Still, the trend line in unquestionably positive. This would actually be a report that would lower the unemployment rate. The consensus was only for an increase of 100,000.
There needs to be a perspective that we are in a deep, deep jobs hole. Growth would need to be incredibly large. And to temper this report somewhat, consider that the Federal Reserve saw no change in the economic landscape in its last meeting that would necessitate scaling back their quantitative easing program.
The Fed minutes from its 14 December policy meeting revealed that “the pace and size of the overall purchase programme” would depend on the strength of the recovery.
“However, some members indicated that they had a fairly high threshold for making changes to the programme,” the notes said.
“While the economic outlook was seen as improving, members generally felt that the change in outlook was not sufficient to warrant any adjustments.”
The Fed pointed to the stubbornly high unemployment rate of almost 10%, and continued weakness in the housing market.
It also questioned the strength of consumer spending among poorer households.
Last year around this time, the White House economic team looked at the reversal of fortune in the jobs numbers, from negative to positive, and let their foot off the gas pedal a bit. That led to a really bad patch in midsummer, when the euro crisis froze up the economy. There are plenty of similar crises on the horizon that could derail this uptick.
But all things being equal, I’d rather have 297,000 more Americans at work than the alternative. We’ll see what the BLS survey says on Friday.