Payrolls Rise

Well they should.

Today’s ADP report suggests that the US private sector added about 187,000 jobs in January. That’s the good news. The disappointment is that this is well down from the 247,000 added in December. Plus that December number was, itself, revised downwards from its original heady 297,000. So all in all, good but could be better.

What is interesting, is that much of the gain in January came in small business where 97,000 new jobs were added. The largest businesses only added 11,000. This is something of a turn about from the earlier months of the recovery when most of the gain was in large companies while their smaller counterparts struggled to expand. Back then we were told that the restriction on small business growth was absence of credit – does this inversion of job growth tell us that credit is flowing more freely? Or is it simply that expectations about the future have changed sufficiently for small business owners to take on more workers? The truth will only emerge when we see more bank data, and, I suspect, it sits squarely in the middle.

Now we wait for the government report on Friday which will give us totals including government employment. Since most government agencies and state level organizations are mired in austerity movements I suspect that the news Friday will be less upbeat: overall payroll growth is probably lagging behind the private sector. We may even see a blip upwards in the unemployment rate since the level of new jobs seems not to be keeping up with workforce growth. Unfortunately there is no neat way to fit the data together, so we are definitely in “wait and see” mode.