Wednesday’s reports from job placement firm Challenger, Gray & Christmas, as well as ADP, were met with jubilation as economists – and the unemployed – felt confident the labor picture in America was improving. But after further analysis, it seems the numbers were not as great as originally thought.
According to ADP, nonfarm private payrolls decreased by 22,000 in January from a month earlier; Wall Street consensus was expecting the decrease to be 30,000. It was the smallest number of jobs eliminated in two years, and provided clues that Friday’s nonfarm payrolls number was going to be better than expected.
Skeptics and cynics felt the data released by ADP wasn’t entirely accurate considering the payroll processing company was some 500,000 off from the actual data released by the Labor Department for the final six months of 2009. In addition, it didn’t help that ADP sharply lowered its December job losses estimate to 61,000, down 23,000 from the initial reading of 38,000.
“The labor market is inching in the right direction, but the economy is still not generating jobs in numbers that will stabilize the unemployment rate,” said Ryan Sweet, a senior economist with Moody’s Economy.com, said to AFP.
The ADP report is one that doesn’t provide a complete picture of jobs in America. The survey only tracks private-sector jobs while the Labor Department’s January nonfarm payroll data includes those and government-level jobs. The report is scheduled to be released on Friday morning at 8:30 a.m. EST.
Wall Street economists are forecasting Friday’s report to show a gain in jobs of 13,000, and the unemployment rate to hold steady at 10%. Typically, the ADP number would be seen as the perfect proxy to accurately forecast the number released by the Labor Department, but not everyone is in agreement that is the case.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the fresh ADP data “does not guarantee a positive payroll number.”
With the amount of government stimulus added to the economy in the past 12 months, everyone from Wall Street to Main Street is hoping positive job figures become a routine occurrence. Just released this week, the 3.8 trillion dollar government budget for the fiscal year starting Oct. 1 calls for an additional 100 billion dollars to reduce joblessness and boost overall economic activity.
“Today one in 10 Americans still can’t find work. That’s why jobs has to be our No. 1 focus in 2010. And we’re going to start where most new jobs start – with small businesses,” President Obama said Tuesday.
Regardless of the credibility of the ADP report, analysts are still sharing optimistic thoughts that Friday’s report will be positive and is the start of a job creation trend that should continue throughout the rest of the year.
“I think that’s likely,” Macroeconomic Advisers LLC chairman Joel Prakken said, to Reuters, when asked about the possibility of a positive payrolls print. “Also note that the number on Friday that people focus on includes government hiring and the government is beginning to hire now for upcoming decennial census so that would give a stronger number to the total than in the private sector.”
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