The U.S. economy added a net 215,000 private-sector jobs last month, according to this morning’s ADP Employment Report — the biggest monthly gain in a year. The upbeat news suggests that the better-than-expected October payrolls report from the Labor Department isn’t a fluke after all.
"The job market remained surprisingly resilient to the government shutdown and brinkmanship over the Treasury debt limit,” says Mark Zandi, chief economist of Moody’s Analytics, which produced today’s update in collaboration with ADP. “Employers across all industries and company sizes looked through the political battle in Washington. If anything, job growth appears to be picking up,” he advises in a press release with today's update.
The upward bias isn’t terribly surprising if you’ve been watching the numbers in the weekly updates for initial jobless claims lately. As I noted in last week’s report on new filings for unemployment benefits, there’s been a conspicuous slide in claims recently, which implies that the growth rate in payrolls will improve in the near term.
Today’s ADP update falls short of a slam-dunk confirmation that the labor market has turned a corner for the better, but the data du jour certainly inspires a brighter outlook. In particular, note how the monthly comparisons for the ADP data in the chart above (red boxes) have been trending higher in recent months. Something similar can be found in the Labor Department’s establishment data for private payrolls (gray bars), albeit in milder form.
For the moment, it’s getting easier to argue that the sluggish round of growth that afflicted payrolls in the summer is fading and giving way to a stronger pace of expansion. Then again, let’s see what Friday’s jobs report brings from Washington. In contrast with today’s ADP release, economists think that we’ll see a deceleration in the official numbers for November when the Labor Department publishes its estimate. The consensus forecast calls for a 173,000 rise in jobs last month in the private sector, down from the October’s 212,000 increase, according to Econoday.
Yes, the jury’s still out on whether the labor market is revving up for stronger growth, but perhaps we'll inch closer to something approximating a verdict by the end of the week.