Strong January Jobs Numbers Help Offset Other Economic News

ADP v. BLS employment changeThe U.S. added more new jobs this month than economists had expected, to some extent offsetting the surprising news that the economy contracted during the last quarter of 2012.

The two economic reports out today offer a picture of growth that’s changed little in the last few years; two steps forward and one back. The ADP National Employment Report says employers, principally smaller firms with fewer than 50 workers, added a net of 192,000 jobs in January. The average estimate of economists surveyed by Bloomberg News showed they were expecting ADP to 165,000 private sector jobs were added. Meanwhile, the U.S. Commerce Department said the economy shrank by an annualized .1 percent, hurt by a combination of factors that analysts said were more one-time events than any precursor of further contraction.

“Nothing’s changed. I think the economy is still growing at 2 to 2.5 percent,” said Mark Zandi, chief economist at Moody’s Analytics, ADP’s partner in producing the monthly jobs reports. “I think a lot of things conspired in the fourth quarter.”

“The job market is slowly, but steadily improving,” he observed. “Monthly job gains appear to have accelerated from near 150,000 to closer to 175,000. Construction is finally kicking into gear and more than offsetting the weakness in manufacturing. The recent gains may be overstating any improvement, particularly in the context of recent revivals in growth at the start of the past three years, but the gains are encouraging nonetheless.”

The monthly jobs gain was the largest since last February, and follows ADP’s revised December estimate of 185,000. The January gains were almost entirely in the service sector, which added 177,000 positions. The 15,000 new jobs in the goods-producing sector came from a strong increase in construction work. The industry added 15,000 jobs; manufacturing lost 3,000.

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Businesses with fewer than 50 employees created 115,000 jobs during the month. The very largest employers — those with more than 1,000 workers — cut 9,000. The balance of jobs were added by firms with 500 to 999 workers.

Friday morning the U.S. Labor Department will issue the government’s numbers. The average of estimates by economists surveyed by Bloomberg predicts the U.S. added 168,000 total workers during the month. They also expect the unemployment rate to have held steady at 7.8 percent. A Dow Jones survey put the number at 166,000, also with unemployment unchanged.

The two jobs report — the government’s, from the Labor Department’s Bureau of Labor Statistics, and ADP’s monthly report — differ in that the BLS includes government workers, while ADP’s report is exclusively private sector positions. In addition, the method by which the data is collected differs significantly. The government conducts surveys, while ADP uses the payroll data provided by some 416,000 U.S. clients employing nearly 24 million workers. However, both reports typically show the same trend and often the same magnitude of change.

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. 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.

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