ADP: 192K private-sector jobs added in January

posted at 11:01 am on January 30, 2013 by Ed Morrissey

Originally, I planned to add this to the GDP announcement — but that was before the BEA laid an egg, and a red egg at that.  Instead, let’s look at the early indicator from ADP of Friday’s upcoming BLS jobs report, which is a lot sunnier than Q4 GDP would suggest:

Private sector employment increased by 192,000 jobs from December to January, according to the January ADP National Employment Report®, which is produced by ADP®, a leading provider of human capital management services, in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally adjusted basis. The December 2012 report, which reported job gains of 215,000, was revised downward by 30,000 to 185,000 jobs.

The BLS actually showed an increase of 155,000 jobs in December, significantly below both projections from ADP.  Last year, ADP brought Moody’s on board to refine their estimates, which routinely overshot the mark by 40-50%, at least as gauged by BLS findings.  The initial December estimate was 39% higher than BLS, and the final number now 19% higher, which indicates that ADP hasn’t entirely solved their estimation problems with Moody’s.

CNBC gave a credulous take on ADP’s figures, although in fairness that came prior to the release of the GDP number:

The private sector created 192,000 new jobs in January, better than expectations and reflective of the slowly improving trend in the labor market.

Small businesses led the way, adding 115,000 new positions. Services again were the most prolific suppliers of new labor, adding 177,000 workers, the bulk coming from the 40,000 in professional and business services jobs.

The manufacturing sector lost 3,000 jobs. Goods-producing businesses added 15,000 positions, primarily in construction.

Economists had expected the report, compiled jointly by ADP and Moody’s Analytics, to show the private sector created 165,000 new jobs in January.

“Job growth is accelerating,” Moody’s economist Mark Zandi told CNBC’s “Squawk Box.”

Is it, though?  It’s possible that ADP will get this month exactly on the nose, but a growth rate of 192K isn’t exactly barnbusting job creation, either.  It beats the 125K needed to keep up with population growth, but is otherwise a rather wan figure.  If, however, ADP overshoots the mark in January as much as it did in December, the number will come in at about 139,000 on Friday — barely at treading-water levels.  Besides, comparing initial estimates from ADP and Moody’s, job growth dropped in the ADP series from 215K to 192K, which is hardly the definition of “accelerating.”

With GDP falling into the red in Q4, I’d be skeptical of a significant amount of job growth over population growth.  That GDP figure is a contraction, not an expansion, and there’s little reason to think that businesses would have expanded while sales retreated.


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With GDP falling into the red in Q4, I’d be skeptical of a significant amount of job growth over population growth. That GDP figure is a contraction, not an expansion, and there’s little reason to think that businesses would have expanded while sales retreated.

As am I, very very skeptical…

Scrumpy on January 30, 2013 at 11:04 AM

Man, you are being a debbie downer. We are soon to have legions of government workers administering ObamaCare! Jobs by the millions…

Outlander on January 30, 2013 at 11:06 AM

I call BS on that number.

gsherin on January 30, 2013 at 11:06 AM

-0.1%. Sorry, not buying it.

I remember the days when he was President Zero. Now he’s failed to live up to even that number.

Gingotts on January 30, 2013 at 11:08 AM

ADP has been overestimating the figures for months. It’ll likely be between 100-150k based on recent trends. Which is the same stagnant rate this economy’s been growing for years.

Doughboy on January 30, 2013 at 11:11 AM

I am interested to know who runs this ADP? Is it some limousine liberal a**hole?… I noticed that they always try to create a fake reality of good economics news in the same way as the limousine liberals who control Wall Street…

mnjg on January 30, 2013 at 11:12 AM

“Job growth is accelerating,” Moody’s economist Mark Zandi told CNBC’s “Squawk Box.”

Do not trust any of these rating agencies such as Moody or the vast majority of economists… Moody and similar agencies are the one who rated junk mortgages security bonds with AAA… The vast majority of people dealing with the financial sectors are controlled by limousine liberals… They lie all the time…

mnjg on January 30, 2013 at 11:16 AM

The guy who said that
There are no stupid questions
Never talked to me…

So, here goes.

If I run a restaurant, and have 20 people working 40 hours a week, and I cut their hours to 30 hours a week to avoid Obamacare, and add another seven 30 hour employees to make up the slack, does that get reported as seven “jobs created”, or is it a wash?

Because if that counts as “jobs created”, we are going to see some pretty favorable numbers over the next few months as employers scramble to get their employees under 32 hours to avoid the Obamacare penalties. And these positive numbers will have nothing to do with people being better off. Quite the opposite, in fact.

Haiku Guy on January 30, 2013 at 11:16 AM

Predict this, Mr. Nate Silver. A whole lot harder than predicting election numbers that are preloaded into vote-collection software, isn’t it?

Archivarix on January 30, 2013 at 11:16 AM

It beats the 125K needed to keep up with population growth

Moving the goalposts again are we.

If we take the labor participation rate at the start of the great recession, 66%, we get a whole other number of jobs needed each month to keep up with population growth. If we keep the same rate of unemployment, 8.1%, we would need 545,551 jobs per month and it would take an entire year to get to the same August rate of unemployment, 8.1%.

This is because by increasing the labor participation rate 2.5%, we took 6,089,150 people not counted and added them to the labor force statistics and of course, they would enter in as unemployed. The unemployment rate is the ratio of those in the civilian labor force who do not have a job against those who who do.

We can also estimate the number of jobs needed each month, just to maintain, by rough numbers. If we assume a smoothed noninstitutional civilian population growth rate of 0.076% per month, then next month’s population growth would be 185,617 additional people ages 16 and over and not locked up somewhere. If we then assume the labor participation rate of this new growth would be 68.0% and not the actual, artificially low 63.5%, we would get an additional 126,920 jobs needed to keep up with this population growth.

This is much more realistic for new population growth is probably going to enter the labor force looking for a job. The BLS counts illegal immigrants, green card holders and foreign guest workers in their statistics and most of the population growth is due to immigration. These people either already have a job upon entering the country, or are going to want one fast. Bottom line, yes Virginia, increased immigration does affect labor markets, all else being static. I do believe to say our economic growth and thus labor demand is static at the moment is not an understatement.

Check out the Atlanta Federal Reserve jobs calculator. It’s Economic Populist approved, we checked their arithmetic and assumptions.

If this is not enough to convince you, we suggest reading this article, this or this one for more background.

Finally our favorite and never reported BLS statistic amplifies the terrible situation for labor in this country. The BLS surveys people considered not part of the labor force and asks if they want a job right now. Below is a graph of the people who said yes and watch how this figure swells.

For August 2012, those not counted in the labor force but report they actually want and need a job increased by 403,000 in a month. That, folks, should have you horrified. Literally we have desperate and destitute people falling through the statistical crevasse, into the abyss where they can only shout out from the numerical darkness, yes I want a job!

SWalker on January 30, 2013 at 11:19 AM

Well,ahem,it did look like Shovel Ready!
(sarc)

canopfor on January 30, 2013 at 11:21 AM

We are soon to have legions of government workers administering ObamaCare! Jobs by the millions…

And in response to the crisis of on campus shootings, legions more of government workers hired for a new federal bureaucracy tasked to provide security for schools nationwide. I hear TSA is bidding for the privilege, a splinter organization – TTTSA – Tots,Teens and Teachers Security Administration.

And in placating the anti-guns crowd, they will only be armed with radios to quickly spread the word of impending trouble and dressed in neon yellow safety vests to be visible deterrents to evil doers intending to do harm.

hawkeye54 on January 30, 2013 at 11:23 AM

Federal spending wasn’t down in the 4th quarter. Another lie coming from the media.

Year over year comparison
Q4 2011 – $875 billion
Q4 2012 – $906 billion

sequential comparison

Q3 2012 $809 billion
Q4 2012 $906 billion

Source: US Treasury

Wigglesworth on January 30, 2013 at 11:25 AM

Notably, ADP dropped its December number from +215K to +185K. BLS had private-sector growth at +168K in its first look of last month.

We’ll be lucky to see a January BLS private-sector number above +145K or a January non-farm number above +125K.

Steve Eggleston on January 30, 2013 at 11:27 AM

This relentless recovery since Barky’s first election is just so awesome.

CorporatePiggy on January 30, 2013 at 11:28 AM

Because if that counts as “jobs created”, we are going to see some pretty favorable numbers over the next few months as employers scramble to get their employees under 32 hours to avoid the Obamacare penalties. And these positive numbers will have nothing to do with people being better off. Quite the opposite, in fact.

Haiku Guy on January 30, 2013 at 11:16 AM

That’s the real story right there.
They never look at the entire picture, so as a result they’re always surprised by “unintended consequences” – which could have been easily predicted if they considered the whole picture.

dentarthurdent on January 30, 2013 at 11:29 AM

Wigglesworth on January 30, 2013 at 11:25 AM

Two points of order:

- The federal share of the GDP is basically military, roads, and buildings, while the majority of federal spending (welfare) is not considered part of GDP. Spending on the military did drop in absolute terms.
- Real GDP also takes inflation into account, and is currently based on chained 2005 dollars.

Steve Eggleston on January 30, 2013 at 11:30 AM

Laser focus on the economy.. um jobs.. um assault weapons um.. Immigration! Yeah! Laser focus on immigration!

Wino on January 30, 2013 at 11:30 AM

That’s the real story right there.
They never look at the entire picture, so as a result they’re always surprised by “unintended consequences” – which could have been easily predicted if they considered the whole picture.

dentarthurdent on January 30, 2013 at 11:29 AM

They aren’t actually surprised. They’re “surprised” in the way that every piece of bad economic news is “unexpected.”

Remember, the official Obama line is that the economy was “fixed” back in June 2009 or so, so every piece of bad news since then has been treated as a shock by the MSM in order to protect Obama.

Doomberg on January 30, 2013 at 11:33 AM

They never look at the entire picture, so as a result they’re always surprised by “unintended consequences” – which could have been easily predicted if they considered the whole picture.

What “unintended” consequences? I believe the consequences were and are fully intended and understood in considering the whole picture. If anyone acts “surprised” its simply theatrical.

hawkeye54 on January 30, 2013 at 11:34 AM

And further – what do any of these “experts” think is going to happen with the numbers for January when the effect of the tax hikes will be felt? Will they be surprised that consumer spending is down, and potentially jobs go down, because people got less take home pay this month?

dentarthurdent on January 30, 2013 at 11:37 AM

Man, you are being a debbie downer. We are soon to have legions of government workers administering ObamaCare! Jobs by the millions…

Outlander on January 30, 2013 at 11:06 AM

You are kind of right. I know someone who works for a hospital group that has about 8,000 employees total. Maybe as much as 10,000. Anyway they had to hire 150 new people to support the structure required for implementing Obamacare.

I have had people tell me that this is another example of how Obamacare will create jobs. This stupidity saddens me a great deal, as the administration could just as easily mandate weekly haircuts and then we’d have a boom in the barber business.

Jobs, courtesy of govt. regulation, do not create wealth or a higher standard of living.

earlgrey133 on January 30, 2013 at 11:37 AM

Let me be clear. I have lasers focused on this. I call this laser, “Joe Biden”. This is my top priority in my kingdo…err… country. We need a strong caliphate…err…. country to get past these bumps in the road. Eat your peas comrades…err… citizens.

LoganSix on January 30, 2013 at 11:48 AM

Haiku Guy on January 30, 2013 at 11:16 AM

Excellent question HG, but I think we already know the answer, and it’s not good.

Jobs, courtesy of govt. regulation, do not create wealth or a higher standard of living.

earlgrey133 on January 30, 2013 at 11:37 AM

Of course not Earl, and any reasonable person would understand this. We are not surrounded with reasonable people.

JusDreamin on January 30, 2013 at 11:53 AM

If I run a restaurant, and have 20 people working 40 hours a week, and I cut their hours to 30 hours a week to avoid Obamacare, and add another seven 30 hour employees to make up the slack, does that get reported as seven “jobs created”, or is it a wash?

Because if that counts as “jobs created”, we are going to see some pretty favorable numbers over the next few months as employers scramble to get their employees under 32 hours to avoid the Obamacare penalties. And these positive numbers will have nothing to do with people being better off. Quite the opposite, in fact.

Haiku Guy on January 30, 2013 at 11:16 AM

First, you need to cut their hours to under 30 – 30 is the point where you need to pay for their PlaceboCare.

Second, that’s 7 “jobs created” on the CES, though if your employees are interviewed for the CPS, they’ll likely be counted as forced to work part-time due to economic conditions while they want to work full-time and thus included in the U-6 number.

Steve Eggleston on January 30, 2013 at 12:05 PM

One more bad estimate by ADP and they should be sent to the showers.

GarandFan on January 30, 2013 at 12:06 PM

They aren’t actually surprised. They’re “surprised” in the way that every piece of bad economic news is “unexpected.”

Doomberg on January 30, 2013 at 11:33 AM

They’re surprised when the unexpected reality doesn’t match with the feel-good liberal propaganda.

dominigan on January 30, 2013 at 12:32 PM

Haiku Guy, that’s not a stupid question.

If I run a restaurant, and have 20 people working 40 hours a week, and I cut their hours to 30 hours a week to avoid Obamacare, and add another seven 30 hour employees to make up the slack, does that get reported as seven “jobs created”, or is it a wash?

Yes, you have created seven more jobs under the BLS accounting system (U3 number). Anyone who had a job for any hours counts as “employed”, even if you’re just walking the neighbors dog for $5.

The U6 numbers get into the marginally employed, part-time for economic reasons, etc. But the U6 numbers are almost never reported.

Daisy_WI on January 30, 2013 at 12:35 PM

If I run a restaurant, and have 20 people working 40 hours a week, and I cut their hours to 30 hours a week to avoid Obamacare, and add another seven 30 hour employees to make up the slack, does that get reported as seven “jobs created”, or is it a wash?

Because if that counts as “jobs created”, we are going to see some pretty favorable numbers over the next few months as employers scramble to get their employees under 32 hours to avoid the Obamacare penalties. And these positive numbers will have nothing to do with people being better off. Quite the opposite, in fact.

Haiku Guy on January 30, 2013 at 11:16 AM

And with simple common sense reasoning, you’ve come across the biggest unreported historical issue regarding the workforce in Socialist/Fascist states: unemployment is always low, because underemployment is massive. Redistribution, when it leads to the equality seen as its goal results in all being equally poor, with what little money left for the people flowing right back into the government.

So indeed, over the mid-term we will have higher rates of employment, but the next generation will have 29.5 hour a week jobs, for under 75% of the wage, just enough to make them working poor unable to avoid the burdens of government mandates and penalties.

Then of course, the next left-wing bastion for the working class will see how unfair that is and demand business to increase benefits for part-time workers, destroying what’s left of this nation’s entrepreneurs and moving us a bit closer to outright Communism. Unsustainable by design.

Gingotts on January 30, 2013 at 12:37 PM

I have basically come to the opinion that these numbers — all of them, good or bad — mean nothing. The margin of error on these government statistics outweigh their descriptive value, not to mention any predictive value they might have once had.

We’ll be just as well off throwing darts at a dartboard.

PackerBronco on January 30, 2013 at 12:51 PM

I have had people tell me that this is another example of how Obamacare will create jobs.

earlgrey133 on January 30, 2013 at 11:37 AM

Did Bastiat live in vain? It sure seems that way at times.

PackerBronco on January 30, 2013 at 12:54 PM

Yes, you have created seven more jobs under the BLS accounting system (U3 number). Anyone who had a job for any hours counts as “employed”, even if you’re just walking the neighbors dog for $5.

The U6 numbers get into the marginally employed, part-time for economic reasons, etc. But the U6 numbers are almost never reported.

Daisy_WI on January 30, 2013 at 12:35 PM

Actually, it only reduces the U-3 number if the freshly-minted 28-hour-a-week employee doesn’t already have a 28-hour-a-week job. it does, however, increase the number of jobs regardless of whether the person who fills it is getting a second job.

Pretty soon, we’ll have more jobs (CES measure) than workers (CPS measure).

Steve Eggleston on January 30, 2013 at 1:11 PM

I have basically come to the opinion that these numbers — all of them, good or bad — mean nothing. The margin of error on these government statistics outweigh their descriptive value, not to mention any predictive value they might have once had.

We’ll be just as well off throwing darts at a dartboard.

PackerBronco on January 30, 2013 at 12:51 PM

Who said that isn’t happening now?

Steve Eggleston on January 30, 2013 at 1:12 PM

Keeping with a pattern we’ve seen over the last few years of stronger than expected job growth in January. Given the stronger than expected December economic numbers that have come out this month (durable goods was a blowout +4.6%), we won’t be surprised to see +200K job growth in the January report. Will probably cool somewhat later this Spring, if the pattern holds …

TouchdownBuddha on January 30, 2013 at 3:22 PM

The December 2012 report, which reported job gains of 215,000, was revised downward by 30,000 to 185,000 jobs.

Does anybody have stats for how often this has happened? It would also be interesting to see the Obama admin as compared to say, the Bush admin. How can people get things so consistently wrong (and always to their benefit or at least to make them initially look better) and still have a job?

hopeful on January 30, 2013 at 3:24 PM

Keeping with a pattern we’ve seen over the last few years of stronger than expected job growth in January. Given the stronger than expected December economic numbers that have come out this month (durable goods was a blowout +4.6%), we won’t be surprised to see +200K job growth in the January report. Will probably cool somewhat later this Spring, if the pattern holds …

TouchdownBuddha on January 30, 2013 at 3:22 PM

You are the most retarded democrat cheerleader ever to grace the pages of HA.

tom daschle concerned on January 30, 2013 at 3:42 PM

“Accelerating”?

Breaking: Q4 GDP drops to -0.1%

Er, accelerating…yeah, sure…downwards.

Dr. ZhivBlago on January 30, 2013 at 4:49 PM

“125K to keep up with population growth”

I don’t know where you went to school but I was taught the number to keep up with population growth and immigration is 200K, not 125K.

crosspatch on January 30, 2013 at 5:22 PM

Well, consider we have about 200,000 people coming out of the workforce every month now that the post war boomers are retiring, maybe we don’t need to create as many jobs as we had to in the past.

crosspatch on January 30, 2013 at 5:29 PM