Tomorrow will bring the monthly jobs report from the Bureau of Labor Statistics, so today we have a few indicators to get a hint as to what may come. The preliminary numbers from ADP look promising, although they usually overshoot the mark. According to the payroll-processing firm, the private sector added 215,000 jobs in December:
Private sector employment increased by 215,000 jobs from November to December, according to the December ADP National Employment Report®, which is produced by Automatic Data Processing, Inc. (ADP®), a leading provider of human capital management solutions, 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 November 2012 report, which reported job gains of 118,000, was revised upward by 30,000 to 148,000 jobs.
Small businesses didn’t do much hiring, only adding 25,000 positions — and small businesses of less than 20 employees actually lost 6,000 jobs. The goods-producing sector looked weak with only 28,000 jobs added, as manufacturing dropped by 11,000 jobs. The service sector looked relatively strong, however:
Service-providing jobs increased by 187,000. Among the service industries reported by the ADP National Employment Report, trade/transportation/utilities services had the largest gain with 53,000 jobs added over the month. Professional/business services added 37,000 jobs and financial activities added 14,000 jobs in December.
Although the 215K level would indicate actual growth in terms of population expansion, which requires roughly 125K a month just to keep pace, it’s still far below the kind of robust pace necessary to put the millions of Americans forced out of the workforce back to work. It is the highest level for ADP’s report since February of last year, when the job market was mildly improving. However, assuming that ADP’s report accurately reflects tomorrow’s BLS report, we would have to have 89 months of this kind of growth over population expansion to re-employ 8 million of those who left the workforce over the last four years.
Gallup’s estimate also looks mildly optimistic:
The U.S. Payroll to Population employment rate (P2P), as measured by Gallup, was 44.4% for the month of December, a slight improvement over 43.7% in November. The current P2P rate still does not match the levels of employment seen in July through October, which exceeded 45% and were the highest since Gallup began tracking P2P in January 2010. …
Gallup’s seasonally unadjusted unemployment rate for the U.S. workforce was 7.7% for the month of December, statistically unchanged from 7.8% at the end of November. Gallup’s seasonally adjusted unemployment rate is 7.9%, a 0.4-point decline over November. Gallup calculates a seasonally adjusted unemployment rate by applying the adjustment factor the government used for the same month in the previous year. Last year, the government adjusted December up by 0.2 points.
Underemployment, as measured without seasonal adjustment, was 17.1% in December, unchanged from 17.2% at the end of November. Still, underemployment improved more than a point over December of 2011, when the rate was 18.3%.
Their P2P rate should not be confused with the workforce measures from the BLS. Gallup compares the population as a whole to the employment rate, while the BLS uses two calculations to measure employment to the workforce and to the workforce-eligible population. They have only used the P2P rate for less than three years, which means that a “high” in this series doesn’t mean much, since it began during near-record lows for workforce participation. Still, the move slightly downward in unemployment gives a glint of optimism, depending of course on workforce measures.
Finally, the weekly jobless claims level rose after the holidays, but remained in the same range as we’ve seen since spring 2011:
In the week ending December 29, the advance figure for seasonally adjusted initial claims was 372,000, an increase of 10,000 from the previous week’s revised figure of 362,000. The 4-week moving average was 360,000, an increase of 250 from the previous week’s revised average of 359,750.
The advance seasonally adjusted insured unemployment rate was 2.5 percent for the week ending December 22, unchanged from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending December 22 was 3,245,000, an increase of 44,000 from the preceding week’s revised level of 3,201,000. The 4-week moving average was 3,224,250, an increase of 6,500 from the preceding week’s revised average of 3,217,750.
Reporting around the holidays is always tricky, so expect to see some significant adjustments later. Also, we may see a brief burst in claims two reports from now, as people may wait until after the holidays to file their new claims due to travel. We probably won’t see a good, reliable level of reporting until mid-January, but nothing so far suggests that we’re moving out of the 360K-380K range of the last 20 months.
What will be tomorrow’s jobs added figure from the BLS? I’m going to guess 185,000, with an unemployment rate of 7.7%. Take the poll below: