The Bureau of Labor Statistics will report on job creation and unemployment on Friday, but as usual we have a couple of leading indicators to hint at what may come. ADP released its June employment report, an erratic predictor of the BLS data, which showed 188,000 private-sector jobs added in June:
Private sector employment increased by 188,000 jobs from May to June, according to the June ADP National Employment Report®. The report, which is produced by ADP® , a leading provider of human capital management solutions, in collaboration with Moody’s Analytics, is derived from ADP’s actual payroll data and measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. May’s job gains were revised downward to 134,000 from 135,000.
Generally, the ADP report overshoots the BLS figures, although they actually underestimated job creation last month. Even the full 188K is only a mediocre figure, barely over the 150K needed to meet population growth. If the BLS number comes in on Friday at 80% of ADP, that would be exactly 150K — the equivalent of treading water. Neither figure would demonstrate that we have anywhere near the kind of job creation needed to get the millions who have fallen out of the workforce back into jobs.
The ADP report presents a mixed bag in the categories of employment. Most of the growth came in the service sector, although the goods-producing sector had its best increase in four months. Manufacturing only added 1,000 jobs, though, which is still its best month in the quarter. Small businesses added 84,000 jobs, most of those in companies of less than 20 employees, and medium-sized businesses added 55,000.
CNBC seems pretty stoked that the numbers beat expectations:
Private companies hired 188,000 new workers in June, considerably better than expectations, indicating the job market continues to heal slowly, according to a report from ADP.
Services again stoked the number, with 161,000 new jobs compared to the goods-producing sector’s creation of 27,000 positions, the survey from ADP and Moody’s Analytics showed.
Economists polled by Reuters estimated the report on U.S. private sector job growth would show payroll growth of 160,000 jobs for June, compared to last month’s survey that showed 134,000.
The report sets the stage for Friday’s nonfarm payrolls report from the government, which is expected to show 163,000 new jobs in the private and public sector combined.
True, the ADP report beat expectations … but four years after the official end of the Great Recession, expectations of 161K and an actual result of 188K in job creation are pretty low expectations to have. In order to put people back to work, our economy needs a sustained job-creation level of 250-300K a month for a solid year or two, and we should have had that in the in Year Two of the recovery at the latest. We’re now starting Year 5 of the Great Stagnation, and there seems to be no end in sight.
Update: Weekly initial jobless claims came in at 343K, which is (a) about where they’ve been for the last few months, and (b) probably not a reliable final figure, as the early report probably had several states estimating rather than giving a hard count. That doesn’t stop the AP from making a silly claim:
BREAKING: Weekly applications for US unemployment aid fell to 343K last week, a sign of steady hiring.
— The Associated Press (@AP) July 3, 2013
“Steady hiring”? That’s a meaningless phrase, but it seems to imply that the 343K level is association with high levels of job creation. That’s simply not true, not even as a multi-week average, let alone a single data point.