The labor market is on the mend… again. Private-sector employment increased 191,000 in March, the best monthly comparison so far this year, according to the ADP Employment Report. That’s in line with the consensus forecast via economists, although the gain was sharply higher than The Capital Spectator’s median econometric prediction. There was also some good news in the revisions: February’s tepid 139,000 advance was revised up to a moderately better 178,000 in today’s ADP release. More importantly, the data continues to show that the year-over-year trend in private payrolls is advancing by nearly 2%. That’s an encouraging signal for thinking nothing much has changed for payrolls, namely, moderate growth prevails.
If there was a serious threat brewing in the payrolls numbers, the annual change would be flashing a warning sign via a consistently decelerating pace of growth. But that’s not the case, either in the ADP data or in the official numbers from the Labor Department. Instead, we see a relatively steady increase of around 2%. That’s been true for some time, and it remains true in today’s release. Despite all the recent light and heat about macro danger, there’s no sign of it in the latest batch of numbers.
There’s also no sign of imminent trouble for the business cycle when we review a broad measure of economic and financial indicators, as the recent update of the US Economic Profile through February shows.
The early clues for March are pointing to more of the same. This week’s March report on the ISM Manufacturing Index continues to signal moderate growth; meantime, the March update on vehicle sales reflected a surge in demand that beat expectations by a wide margin. In addition, Gallup’s Job Creation Index reached a six-year high last month, implying that the labor market will expand for the foreseeable future.
The next major hurdle is tomorrow’s weekly update on jobless claims. But here too the recent numbers have been encouraging. In last week’s report, new filings for unemployment benefits dropped to the lowest level since last November. Economists think we’ll see a modest uptick in tomorrow’s data, but that alone won’t derail the generally upbeat trend in macro via a broad array of data.
The economy’s still growing at a moderate rate, which falls short of what’s needed to quickly repair the remaining damage that’s left in the wake of the Great Recession. But for the moment, at least, there’s no sign of that the recent run of wobbly economic reports is anything more than short-term noise.
“We’re starting to see the recovery in the data that we’ve been hoping for,” according to Brett Ryan, an economist with Deutsche Bank Securities. “This is going to provide policy makers and market participants alike a modicum of confidence that the data swoon over the last couple months is weather-related and not a sign of something more ominous.”