Automated Data Processing
reported Wednesday that the U.S. private sector generated a seasonally adjusted 163,000 jobs in July, 50 percent more than had been forecast by experts surveyed beforehand.
The ADP report could be an indication that Friday's Bureau of Labor Statistics job survey will prove to be considerably better than expected after four consecutive months of weak reports. The consensus of experts forecasts the BLS report will show 100,000 net new jobs were created in July. The BLS includes both private sector and public sector jobs.
On the other hand, ADP initially reported 176,000 new jobs for June and the BLS reported less than half that. So many observers who took that month's report as an indication the slowdown in job growth had ended are being more cautious this morning. The two reports are often at odds with each other, but they almost always trend in the same direction. ADP revised its June numbers down slightly Thursday, to 172,000.
Joel Prakken, chairman of Macroeconomic Advisers, LLC, which handles the ADP jobs survey, noted that the increase in July marked the 30th consecutive month of increases in net new jobs in the private sector. He said the number of new jobs is an indication that the pace of hiring has picked up after a slowdown that began in March. he added:
This gain in private employment is strong enough to suggest that the
national unemployment rate may have declined in July. Today’s estimate from ADP, if reenforced by a similar reading on employment from the BLS on Friday, will alleviate
concerns that the economy has slipped into a downturn.
The
Wall Street Journal reported that TrimTabs Investment Research showed a much smaller gain of 115,000 jobs for July. Trimtabs uses daily tax deposits from payroll withholding to calculate the monthly change in payrolls.
"We are unlikely to see any significant improvements in the job market without further government stimulus," the TrimTabs report said.
If the BLS report shows substantially better than previously, that would certainly be a positive indication for the economy come fall. But the latest gross domestic product report showed a meager 1.5 percent annualized growth in the second quarter. That's down from the 1.9 percent of the first quarter, not exactly encouraging. In fact, most indicators for jobs growth are down.
But anybody who wagers the mortgage payment on what the BLS figures will be always runs the risk of becoming an apartment dweller. If the bureau reports at consensus—100,000 news jobs—that wouid be, according to the jobs calculator at the Federal Reserve Bank of Atlanta, just enough to absorb the increase in the working-age population. At that rate of job growth it would take well into the 2020s to return to the unemployment rate of December 2007, when the Great Recession began.