The job numbers are getting better and so are the revisions to previous month’s figures. The ADP National Employment Report prepared jointly with Macroeconomic Advisors, LLC reported that private employers added 216,000 new jobs to their payrolls in February. This is the sixth consecutive month the private sector has added more jobs than they eliminated. The lionshare of new jobs were created by small businesses (those organizations that employ 1 to 49 workers) where 108,000 new jobs were added. Large employers added 20,000 jobs and medium-sized companies with 50 to 499 employees added 88,000 workers for the month of February. The private sector numbers come just days before the U.S. Department of Labor’s Bureau of Labor Statistics will release their own employment figures for February. The two reports often paint a somewhat different view of the job market, but generally speaking they agree on the direction or trend of the data. The Bureau of Labor Statistics takes into account public sector employment, whereas the ADP report does not. The ADP report is generated from 500,000 business payroll clients of ADP and includes 21 million U.S. employees. A CNNMoney report noted that January numbers from the Labor Department were 243,000 – so if February does come in at 213,000 as expected – it would a loss of momentum only two months into the new year.
Most economists expect the Labor Department figures to show at least 213,000 new jobs for February. That number will be net of government jobs losses as the federal government and state, county and city government continue to trim their payrolls. The new jobs from private employers will offset the public sector losses, but experts warn that as the recovery meanders that more government job losses are to be expected as government budgets get downsized due to shortfalls in tax revenues. Consumer spending has been slow to improve and collections of sales tax is lower than in previous years. The foreclosures in the real estate market have reduced property tax receipts and many homeowners have filed appeals to get onerous assessments revised to reflect current market values. The future for public sector job growth is expected to remain negative to flat for the remainder of 2012 and into 2013.
Numbers Are A Moving Target
Every release of new data brings a revision or update to the previous period’s figures, whether it’s monthly or quarterly-based data. The February ADP report brought a positive, upward revision to January’s figure of 3,000 more jobs. From the Labor Department we learned that since July 2010 the initial estimate of payroll employment has been revised every month, except for two. Experts have grown accustomed to the changes, but add that getting the number right the first time would be more useful and may provide a higher measure of confidence. The markets have learned to “discount” the initial report if the numbers are not what were expected. The process of calculating new job creation and reporting unemployment rates contain many moving parts, so some argue that allowing for a little leeway in final, revised numbers from the initial report goes with the territory. Still, some economists hope for improved accuracy as the recovery plods along with everyone waiting for signs of sustainable job growth some three years after the recession ended.
Consumer Confidence Hangs In The Balance
The jobs data is so important because it impacts the psyche of U.S. consumers and influences spending behavior. Consumers are credited with contributing 70 percent of gross domestic product (GDP) through their spending – while the exact figure is debatable – consumers are not happy when there are fewer jobs available. The prospect of an improving jobs picture helps people to feel more confident and less worried about their spending habits. When March’s job data is released it may be the first full quarter of positive job growth and it will come not a moment too soon in the recovery.