If this comes close to the Bureau of Labor Statistics report on Friday, it will signal a decent if unspectacular start to the New Year. ADP estimates that employers added 257,000 private-sector jobs last month, an increase of 40,000 jobs over its estimate for November, and the best result for all of 2015:
Private sector employment increased by 257,000 jobs from November to December according to the December ADP National Employment Report®. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by ADP® 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 news isn’t all good. In fact, it shows that 2015 closed out at a lower rate of job creation than 2014, at least on the ADP scale:
“2015 had a strong close with December showing the largest job gains of the year,” said Ahu Yildirmaz, VP and head of the ADP Research Institute. “Overall, the average monthly employment growth was just under 200,000 for the year in contrast to almost 240,000 jobs per month in 2014. Weakness in the energy and manufacturing sectors was mostly responsible for the drop off.”
Mark Zandi, chief economist of Moody’s Analytics, said, “Strong job growth shows no signs of abating. The only industry shedding jobs is energy. If this pace of job growth is sustained, which seems likely, the economy will be back to full employment by mid-year. This is a significant achievement, given that the last time the economy was at full employment was nearly a decade ago.”
Neither of these levels suggest blockbuster growth. The US economy needs to generate around 150,000 jobs a month to keep up with population growth at current workforce-participation rates. Coming in “just under 200,000 a month” isn’t enough growth to make significant dents in the ranks of sidelined workers from the Great Recession, and seeing the growth level subside over the last year doesn’t produce much confidence that December’s outlier result will sustain in 2016.
Last week, the Joint Economic Committee of Congress issued a new report on the Obama recovery that’s loaded with even more bleak news.
On almost every measure examined, the 2009-15 recovery since the recession ended in June of 2009 has been the meekest in more than 50 years.
Start with the broadest measure: growth in output. The chart with this editorial compares the Obama growth pace with that of the average recovery coming out of the last eight recessions, and with the Reagan recovery, and over the same number of months (77).
Democrats used to disparage the Reagan expansion as nothing special. Yet the growth rate over the first 25 quarters under Reagan was 34%, vs. 14.3% under Obama.
How much does this matter? If we had grown at an average pace, GDP in 2015 would have been about $1.8 trillion higher. Under the Reagan recovery, growth would have been $2.7 trillion higher. …
But even on a per capita basis, real GDP has grown only 9% vs. 18.8% for the average recovery. That is the lowest of any post-1960 recovery. The growth decline in this key gauge of living standards is alarming.
IBD’s editorial board specifically looked at the jobs data, and found it even worse:
Yes, official unemployment of just over 5% today is very low.
But that’s because 94 million people in America over the age of 16 aren’t in the labor force. Labor force participation rates have fallen sharply for working age Americans. If job growth had been the same as in the average recovery, we would have 5.9 million more Americans working.
Amazingly, if we had had a Reagan-paced job recovery, we would today have at least 12 million more Americans working. That’s more people than in the labor force of Michigan and Indiana combined.
Reuters notes that the news from ADP didn’t get markets excited today:
The data had only a modest impact on U.S. financial markets, which had been jolted overnight by news that North Korea had claimed to have tested a miniaturized hydrogen bomb and by worries about the state of the Chinese economy, the world’s second largest. U.S. equity index futures remained under pressure, suggesting stock prices would open lower, and prices for U.S. Treasuries were solidly higher, although slightly off from the day’s highs.
Consider this a meh, for the most part. If the BLS comes in considerably lower, it might heighten scrutiny on the Fed for raising interest rates for the first time in nearly a decade, but even that would probably be mitigated by the long-term criticism of their zero-interest policy that preceded it.