Brighter Jobs Market

This is a very hectic week, but today’s ADP jobs report is worth noting: the private sector added another 170,000 jobs in January, down from December’s 292,000, but decent nonetheless. This means we have had twenty-four straight months of job creation and confirms what other statistics are telling us: the recovery is well under way, but remains at a steady rather than dramatic pace.

While this is all good news, we should not get carried away. The economy is laden with under used resources, both labor and capital, and so we are leaving a tremendous amount of wealth on the table each month.

The details of the report suggest that there is a stirring of growth at the lower levels of the economy. The vast majority of the new jobs were in small or medium sized businesses, and the service sector is the primary driver of growth – 152,000 of the total were in services, while only 18,000 were in manufacturing.

Also of interest, because it gives us insight into consumer confidence outside of the usual surveys, is that there has been a steady increase in the number of workers quitting their jobs voluntarily in order to take a better job. This supports the notion that the tone of the labor market has improved and that, slowly but surely, workers are shaking off the deep despondency of the crisis. Hopefully we can maintain this trend since it will have a compounding effect by spreading confidence throughout the economy.

Lastly: one of the much discussed aspects of this crisis has been the way in which the collapse in property values contributed to the sticky labor market. Many workers were not able to move to new regions of the country to take a new job because they could not sell their home without taking a loss. This added to the problems all too evident in the job market and has made the recovery much more difficult. The news that more and more people are changing jobs of their own volition suggests that they are able or willing to make a move despite the impediment of a potential housing issue. Perhaps we are seeing a general loosening of conditions and thus the beginnings of a stronger trend.

Perhaps.

We will have to watch theses kinds of statistics carefully over the next few months in order to tease such information from the data.

Still the jobs market is much better than it was. And that’s worth noting.