Private payrolls increased by 192,000 in January, according to this morning's ADP Employment Report. That's a bit stronger than December's 185,000 gain and it's the best monthly pop in nearly a year. Today's release tells us that jobs creation remains at a stable, if not slightly better pace relative to the trend in recent months. In turn, that sets us up for thinking positively about Friday's January payrolls report from the Labor Department. Meanwhile, it seems as if the economy's capacity for moderate growth appears to be intact in the new year, at least as far as jobs are concerned via ADP's analysis.
"The job market is slowly, but steadily, improving," says Mark Zandi, chief economist of Moody's Analytics, in a press release that accompanied today's report. "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."
An econometric review of the historical relationship between the ADP data and the private-sector payrolls numbers from the government implies that Friday's official jobs update will post a modest improvement over December's 168,000 gain, which was the lowest monthly increase since last June. Running a regression analysis on the monthly changes for the ADP and government numbers, and assuming the relationship holds for January, suggests that Friday's increase will be on the order of roughly 191,000 for private jobs.
Precise forecasts are always suspect, of course, but today's ADP report implies that the government's January payrolls report will deliver another decent, if not necessarily impressive, number. In that case, we'll have another data point to consider for assuming that the slow-growth trend for the economy survived the fiscal cliff debate last month and remains alive and kicking in the new year.
Yes, the January numbers have only started to trickle in, and so it's premature to say anything definitive about the kick-off for 2013. So far, however, the few data points we do have continue to lean in a positive direction.