There’s enough upward momentum in today’s ADP Employment Report for February to encourage the belief that the labor market is healing. But true to form these days, there’s still not enough juice in the numbers to slay worries that job growth will be anything other than modest for the foreseeable future.
Last month, nonfarm payrolls rose by a net 217,000, according to ADP. That’s up slightly from January’s 189,000 gain. Based on ADP’s historical data, February’s advance looks quite good. As good as the glory days of 2004-2007, in fact. Perhaps, then, today’s number is a sign of better times approaching. Let’s see what comes from this Friday’s jobs report from the Labor Department, the more influential number. The consensus forecast calls for a rise that’s more or less in sync with today’s ADP report.
“Today’s ADP National Employment Report shows another solid increase in U.S. private sector employment, with gains across all size businesses and in both the goods-producing and service-providing sectors,” says Gary C. Butler, president and CEO of ADP, in a press release today. “Employment gains in the small-business sector have been positive for twelve consecutive months, an encouraging sign for the job market. ADP’s key business metrics for its small-business segment through December 2010 also reflected a strengthening labor market, as well as robust demand for payroll and human resource services.”
After yesterday’s encouraging rise in the ISM Manufacturing Report for February, the case for optimism is arguably higher today. But while it’s clear that the labor market is recovering, and the recovery is persistent, it’s not yet obvious if there’s more than moderate growth ahead. Today’s ADP number is a down payment on thinking positively, but the macro backdrop is still too shaky for deciding if we’re headed for a stronger and sustainable period of job creation.
The next clue arrives in tomorrow’s weekly update on jobless claims. Last week’s new filings dipped under 400,000 (seasonally adjusted) for only the third time since the Great Recession ended. Witnessing a fourth would boost sentiment, although the forecasts for tomorrow’s number suggest that it’s going to be close for delivering another report under 400k.