ADP jobs report blows past all expectations
by Meteor Blades
Wed Jan 05, 2011 at 11:03:35 AM PST

An employment report based on the payrolls of 430,000 private businesses announced a huge gain in new non-farm job creation today, nearly three times what the expert consensus had predicted. The gain "suggests nonfarm private employment grew very strongly in December, at a pace well above what is usually associated with a declining unemployment rate." In the report by Automated Date Processing, Inc., 297,000 private-sector jobs were created between Nov. 12 and Dec. 12, 2010, the highest figure in the 10 years ADP has been issuing its monthly report. The consensus had been for 100,000 jobs.

The closely watched survey strongly suggests the government report scheduled for release Friday will show its best results since April, and possibly the best results in private hiring gains since the Great Recession began in December 2007. The only caveat is that the ADP numbers are notoriously erratic from month to month. The average monthly difference between the government and ADP jobs reports for the past year is 54,000.

Of the total, 270,000 of the job gains were in the service sector, with only 23,000 in factory work, an indication that many of the gains were retail hires related to the holiday season, which could mean vast numbers of them are temporary, something that won't be clear until next month's jobs report from the Bureau of Labor Statistics. But all parts of the economy showed job growth, including the battered construction sector.

As I suggested here in an otherwise pessimistic commentary, numerous economic gauges in the past month have hinted that Friday's BLS jobs figure for December may be well above the consensus of 140,000, perhaps more than 200,000. The ADP report strongly reinforces that possibility. Given cutbacks in government jobs, any gains will be in the private sector. Average job growth has shown a disappointing average monthly advance of 86,500 jobs for the first 11 months of 2010, far too few to reduce the unemployment rate.

That rate now stands at 9.8 percent, only slightly lower than at the beginning of last year, a total of 15.1 million unemployed. Another gauge - the BLS's U6 tally that includes unemployment, underemployment and some but not all workers who have given up looking - stood at 17.1 percent last month. All told, some 30 million Americans in the labor market are unemployed, underemployed or want jobs but have given up looking for one.

In other news today, the Institute for Supply Management reported that the non-manufacturing segment of the economy showed another monthly gain in November, above the expert consensus. But the closely watched report from ISM, which also showed gains in manufacturing earlier this week, contained some bad news about employment, contradicting the ADP report. While the ISM's index of business activity and factory orders both rose to 63.5, above the expected numbers, the ISM employment index fell more than 2 points to 50.5. Anything above 50 constitutes growth.

None of these statistics indicate the quality of jobs being added to the economy 19 months after the recession ended (according to the official arbiter of such matters, the National Bureau of Economic Research). Many of the nearly one million jobs that have been gained in the past year are temporary and part-time, with lower wages and fewer fringe benefits. With the exception of a brief period in the late '90s, stagnant wages for the middle class have been a problem since the 1970s. For workers lower than the middle class, inflation-adjusted wages have actually fallen over the past nearly four decades, a product of union-busting, productivity gains that have boosted profits but not been shared by workers and massive off-shoring of jobs because of the globalizing economy.

Few elected politicians of any persuasion have showed any propensity for doing anything about this dreadful state of affairs for American workers. And if upcoming jobs reports in the next few months show an easing of the acute crisis brought on by the Great Recession, you can be certain that any focus on the economy's chronic problems for workers will not be on the agenda of anybody with clout to do something about it.