A day or so before the Department of Labor produces its own employment report (due out Friday), ADP comes out with its own. The two are usually pretty close.
Here are some first impressions. First, more jobs were created by small businesses (under 50 employees) than by either medium-size or large businesses. That’s a good thing. Small businesses are where the action is in job creation. Small business owners can react to opportunities more quickly, they’re less likely to be hemmed in by union rules or upper management mandates. They’re more nimble.
Second, the January numbers were revised upward from 192,000 to 215,000, an improvement of 23,000. This is more good news as the revision is based (hopefully) on more complete data. The February numbers are preliminary.
Third, there appears to be a slowdown if you look back to November during which month 276,000 jobs were created. So the trend downward over the last four months is unsettling.
Fourth, in an economy employing 130 million people, these numbers are pitifully small. To bring the unemployment rate down by one full percentage point would require new jobs growth of at least 1.3 million. Plus turnover. So I think the estimate by informed souls that it’ll take years to bring unemployment back down to “normal” – about 5 percent – is correct. We could be looking at another decade, and that assumes no new government programs that distort the economy further.
Next, looking back over the past decade, at no time did new jobs ever exceed 300,000 in a month, so we’re still operating well under a very low performance bar.
Finally, digging into the press release by ADP, 164,000 of those 198,000 new jobs in February were in the “service” sector. Translation: the lowest-paid jobs are the ones being filled. You can draw your own conclusions here.
Naturally, establishment economist Mark Zandi thinks the ADP report is borderline wonderful:
Mark Zandi, chief economist of Moody’s Analytics, said, “The job market remains sturdy in the face of significant fiscal headwinds. Businesses are adding to payrolls more strongly at the start of 2013 with gains across all industries and business sizes. Tax increases and government spending cuts don’t appear to be affecting the job market.”