ADP Says Economy Job Growth Gaining Momentum

Payroll processor ADP reported this morning that the U.S. added 201,000 private sector jobs in March, an estimate that bolsters expectations that Friday’s government jobs count will show an equally positive increase in hiring.

The estimate, based on payroll data from ADP’s half-million employer clients, is slightly lower than the 205,000 average of economists’ predictions. However, it is the second consecutive month of 200,000-plus private sector job gains, even after accounting for the downward adjustment in February’s job count from the initial 217,000 to 208,000.

The National Employment Report from ADP and its partner Macroeconomic Advisers says most of the hiring came from small and mid-sized businesses, which cumulatively added 184,000 jobs.

The service sector added 164,000 jobs in March, while manufacturing and goods producing businesses added 37,000 jobs each.

While economists and investors consider the ADP numbers a sort of bell cow for the official U.S. Labor Department employment report typically released the first Friday of each month, the data doesn’t always track well. Part of the explanation is that the report from U.S.  Bureau of Labor Statistics includes government jobs. For months, now, that sector has been laying off workers.

Still, it’s a valuable indicator of employment trends. Alan Ruskin, an economist with Deutsche Bank, told The Wall Street Journal:

OK nobody is going to get too excited about a number that has proved such a poor indicator of employment changes in recent months, but the 3-month average of ADP has been above 200K for 2 months which is a comparatively rare event. This ‘feat’ was achieved only once in the prior recovery back in 2004, when the 3m average was above 200K for only 2 months.

Economists expect that Friday’s report will show employers added about 190,000 jobs in March, even as the unemployment rate inched up to 9 percent. February’s decline in the rate — from 9.0 percent to 8.9 percent — is considered a statistical aberration by many.

Whatever the numbers turn out to be, it’s now almost unarguable that the U.S. economy is growing jobs again, and that the momentum is picking up.

Note my use of “almost.” Residential construction and housing prices are stalled or down, and the Conference Board said yesterday that consumer confidence took a beating in the month, dropping from 72 to 63.4. There are other indices and measures that show similar ups and downs. But overall, the evidence is that employment is growing.

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The Conference Board’s Employment Trends Index was up in February for the fifth month in a row. The Index is a combination of multiple other indices, which, taken together, smooth out bumps in any one of them. Meanwhile, its Help Wanted OnLine report said 208,000 more jobs were advertised online in March than in February. Since December, the number of advertised openings has grown by 600,000.

That’s consistent with SHRM’s most recent LINE report. The recruiting difficulty indices for both manufacturing and service sector hiring took double digit increases in February compared to February 2010. However, the LINE report predicted service sector hiring would be down in March, on a year-over-year basis, while manufacturing would be up.

Friday’s BLS report will show how accurate those predictions were. The ADP report suggests hiring was up across the board.

Meanwhile, Challenger, Gray & Christmas said today that employers announced 18 percent fewer layoffs in March than in February. On a year-over-year basis, announced layoffs are down 39 percent. Says the global outplacement consultancy:

Overall, employers have announced 130,749 job cuts through the first quarter, 28 percent fewer than the 181,183 planned layoffs announced in the same period of 2010.  The three-month tally is, in fact, the lowest first-quarter total since 1995, when employers announced 97,716 job cuts from January through March.

The largest share — 46 percent — of the 41,528 layoffs the consultancy tracked during the month came from government.

John Zappe is the editor of and a contributing editor of John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.


3 Comments on “ADP Says Economy Job Growth Gaining Momentum

  1. Recent Economic Forecasts

    I find this info & comment from the CBO particularly interesting:
    Natural rate of unemployment = 5.2 to 5.3% (don’t reach that rate until 2016) and this from the OMB:
    Growth in potential GDP = 2.5% (economy returns to potential at the end of 2017);

    Univ. of Michigan Economic Forecast (executive summary – March 15, 2011): economic growth = 3.6% in 1st half of 2011, 2.9% in 2nd half of 2011, 2.9% in 2012; core inflation (CPI) = 1.2% in 2011 (overall inflation =2.4%) and 1.6% in 2012 (overall inflation = 1.6%); unemployment rate averages 8.8% in 2011 and declines to 8.4% by end of 2012

    Economic forecasting survey, Mar 2011 (WSJ): economic growth = 3.4% in 2011; unemployment at 8.8% in June 2011, 8.4% at end of 2011; inflation = 2.5% in 2011

    Wells Fargo Securities Economic Forecast (latest monthly forecast, Mar 2011, latest weekly forecast): economic growth = 2.7% in 1st quarter of 2011, 2.6% in 2011 and 3% in 2012; core PCE inflation = 1% in 2011 and 1.4% in 2012; CPI inflation = 3.1% in 2011, 2.6% in 2012; unemployment rate declines slowly to 8.4% at end of 2011 and 8.2% at the end of 2012; Fed begins to raise interest rates in 2012 Q2

    Bloomberg (March 2011): (note: despite what the article states, economists do not ignore the impact of commodities on the economy); economic growth = 3% in 2011; unemployment averages 8.8% in 2011; inflation = 2.3%, core inflation = 1.1%

    Fed Forecast as of Jan, 2011: economic growth = 3.4-3.9% in 2011 and 3.5-4.4% in 2012 (note: these are from 4th quarter to 4th quarter while other forecasts compare yearly averages); unemployment rate = 8.8-9% in 2011 and 7.6-8.1% in 2012 (estimates are for 4th quarter of the respective year); natural rate of unemployment = 5 to 6% (range = 5 to 6.2%); inflation as measured by core PCE index of 0.8% to 1% in 2010, 1 to 1.3% in 2011 and 1 to 1.5% in 2012

    OMB (Feb 2011 – see pdf page9): economic growth (end of year comparisons) = 3.1% in 2011, 4% in 2012; unemployment (end of year) = 9.1% in 2011, 8.2% in 2012; inflation = 1.4% in 2011, 1.9% in 2012; natural rate of unemployment = 5.3%, growth in potential GDP = 2.5% (economy returns to potential at the end of 2017); see pdf page 12 for comparison with other forecasts

    Survey of Professional Forecasters (latest survey Feb 2011): economic growth = 3.2% in 2011, 3.1% in 2012, 3% in 2013; core inflation (PCE) = 1.3% in 2011 and 1.6% in 2012 (overall PCE inflation = 1.6% in 2011, 1.8% in 2012); unemployment rate = 8.8% in 2011Q4; average unemployment rate = 8.5% in 2012, 7.8% in 2013

    Reuters Survey (CNBC – Feb 2011): forecasts for 2011 – economic growth = 3.2%, inflation = 1.9%, core inflation = 1.1%

    CBO (Jan 2011): economic growth = 3.1% in 2011, 2.8% in 2012; unemployment = 9.2% in fourth quarter 2011, 8.2% in 2012Q4, core PCE inflation = 1% in 2011 and 1.2% in 2012; growth in potential GDP = 2.2% from 2011-2016 and 2.4% from 2017-2021; natural rate of unemployment = 5.2 to 5.3% (don’t reach that rate until 2016)

    IMF (Jan 2011): includes global forecasts; US economic growth = 3% in 2011, 2.7% in 2012

    Quarterly economic survey (USA Today – Jan 2011): economic growth = 3.5% in fourth quarter, 3.4% in 2011; unemployment = 9% in fourth quarter of 2011; inflation = 1.8% in 2011

    World Bank Economic Forecasts for most countries (Jan 2011): US economic growth = 2.8% in 2011, 2.9% in 2012; PCE inflation = 1.5% in 2011, 2% in 2012

    American Banker’s Association (Bloomberg): economic growth = 3.3% in 2011; unemployment rate finishes the year at 9.4% as 2.1 million jobs are created; core PCE inflation = 1%

    CNN-Money survey (Dec 22): lists forecasts of key economic variables by 23 economists; average forecasts for 2011 – unemployment in Dec 2011 = 9%, economic growth = 3.3%, inflation = 1.8%; average forecasts for 2012 – unemployment rate = 8.1% in Dec ’12; economic growth =3.4%; inflation = 2.1%

    Livingston Survey (latest survey – Dec 2010): economic growth = 2.5% in first half of 2011 and 2.9% in second half of 2011; unemployment rate = 9.4% in June 2011 and 9.2% in Dec 2011; inflation (CPI) = 1.6% for 2011 and 2% for 2012

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