The recession-is-always-imminent crew took it on the chin again today via upbeat data on private payrolls in November. US companies added 216,000 workers (seasonally adjusted) this month, according to the ADP Employment Report. The gain - the largest in five months - gives the Federal Reserve more ammunition for arguing that the economy is strong enough to warrant raising interest rates at next month's FOMC meeting.
"Businesses hired aggressively in November and there is little evidence that the uncertainty surrounding the presidential election dampened hiring," said Mark Zandi, chief economist of Moody's Analytics, which co-produces the data with ADP (NASDAQ:ADP).
As an added bonus, the year-over-year growth rate in private jobs creation picked up, rising nearly 1.9% for the year through November. The firmer trend suggests that Friday's official jobs report will post a stronger growth rate too.
Economists were already looking for an improvement in the monthly comparison for private payrolls via the government's November estimate before today's ADP release. Econoday.com's consensus forecast for Friday's report: a gain of 155,000, up from 142,000 in October. With the benefit of ADP's report in hand, is it time to revise the estimate higher for Washington's spin on the labor-market trend?
This much is clear: the probability that the US fell into recession this month is virtually nil. Surprised? You shouldn't be. A broad reading of indicators has been delivering that message all along - this month's profile of business-cycle risk, for instance.
The bigger question at the moment is whether the slow descent in the annual growth rate for payrolls over the past year and a half is reversing? Today's ADP report hints at the possibility. If so, the outlook for softer Q4 GDP growth may also be due for an upward attitude adjustment. It's too early to say for sure, but if today's results are a sign of things to come, we may see more supporting evidence in the Labor Department's update on Friday.