Employment: Same Again

Be careful with today’s ADP report on private sector employment, a switch in methodology and economic forecasting partner could muddy the trend line for a while. We don’t know yet if the new method has created a blip this month. Time will tell.

Meanwhile on to the facts:

The report says that the private sector added 158,000 new jobs in October compared with 88,200 in September. Apart from the potential for distortion from the method change this represents a good sized jump and confirms the now well established story that the economy is improving at a steady, if unspectacular, pace.

The new jobs were scattered across all sectors of the economy which is another indicator of general strength, although manufacturing was weak with a reduction of 8,000 – the only major sector showing a decline. Construction led the way with a pick-up of 23,000, which supports the notion that housing is returning to some semblance of normality.

The weekly report on new claims for unemployment assistance also showed an improvement. Claims dropped by 9,000 to 363,000. The new claims data has been particularly muddled lately because of reporting quirks in the California component. This created a sudden sharp improvement three weeks ago followed by an equally sudden and sharp deterioration. The last two weeks, though, have been more settled. Unfortunately the conclusion we can draw from this less volatile period is that the claims are declining at a very modest pace. There is no great momentum in the labor market.

Taking the ADP and claims numbers together creates a familiar picture. Slow but steady.

That’s better than nothing, but it isn’t very good. And we could certainly be doing better were our leaders focused on the real issues rather than on ghosts.