ADP Employment Number Surprised to the Upside

If today’s better-than-expected good news in the ADP Employment Report is a sign of things to come, the freshly minted Republican takeover of the U.S. House of Representatives is starting with a favorable tailwind. Actually, make that a modestly less troubling tailwind.

The economy created a net 43,000 private-sector jobs last month, ADP reports. That’s about double the amount that economists were forecasting. Of course, economists weren’t expecting much to begin with, which makes beating expectations these days a bit like outrunning the town drunk who’s passed out in the parking lot. A win’s a win, but under these circumstances it’s nothing to brag about.

Nonethless, today’s number marks a clear reversal from September’s revised 2,000 loss, based on ADP’s calculations. But that’s as far as it goes. Even 43,000 new jobs is a world below what’s needed and what one would expect at this point after such a deep recession. In short, we’re still seeing only tepid growth in the labor market. It’s a consistently tepid growth trend, but that’s all. And so while the Republicans scored a potent political victory last night, they’re stuck with all the economic problems that helped reduce the Democrats’ power in Washington.

Joel Prakken, Chairman of Macroeconomic Advisers (the consultancy that co-produces the report with ADP), says via a statement today:

Since employment began rising in February, the monthly gain has averaged 34,000 with a range of -2,000 to +65,000 during the period. October’s figure is within this recent range and is consistent with the deceleration of economic growth that occurred in the spring. Employment gains of this magnitude are not sufficient to lower the unemployment rate. Given modest GDP growth in the second and thirds quarters, and the usual lag of employment behind GDP, it would not be surprising to see several more months of lethargic employment gains, even if the economic recovery gathers momentum.

As the first stat out of the gate after yesterday’s Republican renaissance, today’s employment number could be seen as a small gift–relative to what might have been. For a moment, at least, the headlines are still focused on politics. Today’s ADP jobs update is hardly encouraging, considering what the economy needs. But it’s good enough to push the economic problems into the future as far as the media’s concerned. Grace periods, however, aren’t likely to last long these days when it comes to macro challenges.

About James Picerno 894 Articles

James Picerno is a financial journalist who has been writing about finance and investment theory for more than twenty years. He writes for trade magazines read by financial professionals and financial advisers.

Over the years, he’s written for the Wall Street Journal, Barron’s, Bloomberg, Dow Jones, Reuters.

Visit: The Capital Spectator

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