ADP Report Suggests Recession to Be Averted
The latest estimate of job growth from payroll giant ADP and forecasting firm Macroeconomic Advisers suggests employment isn’t booming, but it ain’t too shabby either.
Private nonfarm employment grew by a seasonally-adjusted 8,000 jobs in March, the report said, after declining by a revised 18,000 jobs the previous month. The report has been criticized in recent months for being overly optimistic compared to the Labor Department’s official tally of job creation.
An increase of 8,000 private-sector jobs in March, plus an estimate of 20,000 public-sector jobs that ADP doesn’t count, means employers would have added nearly 30,000 jobs in March when the Labor Department releases its estimate on Friday. That figure is way above the consensus, which expects a loss of around 45,000 jobs for the month.
“Since October 2007 there has been a dramatic divergence in these two measures of employment,” wrote Ray Stone of Stone & McCarthy Research Associates in Princeton, N.J. following the report’s release. “While we don’t want to be dismissive of the ADP story, we are inclined to favor the message told by the recent [Labor Department] data…[which] seems to fit better with our general understanding of current economic conditions.” Mr. Stone is predicting a loss of 70,000 jobs in March.
But the pessimism of recent months seems to have lifted somewhat. Yesterday, a mediocre (rather than horrendous) report of manufacturing activity and record-breaking write-downs by UBS prompted some to start asking whether we’ve reached the bottom of the credit crunch. The Dow Jones Industrial Average rose nearly 400 points on the resurgent optimism.
Joel Prakken, chairman of Macroeconomic Advisers, said the ADP figure “joins a list of growing indicators that while still weak are better than expected.” He said the “very clear” signals of huge job losses recorded in the ADP survey during the 2001 recession aren’t being repeated this time around. “The survey is now signaling soft employment and an [economic] slowdown but nothing that suggests recession,” he said. –Kelly Evans
Yeah right, job market is doing great!
To lose jobs, those has to added to begin with. Forgot teh “jobless recovery”? I guess economy is just not bad enough to lay off those who earn minimal wages.
Is the ADP report relevant? It has historically shown no predictive value whatsoever to the Labor Department’s report.
Well, in reference to Tolga, the cliché that “it is a rescission when your neighbor lost his/her job, and it is a depression when you lost your job” holds true. I can understand many people’s emotions are running high, but the numbers do not show that we are experiencing the “worst economy since the great depression” that many of the pundits have been claming. But this is why bubbles happen in the first place, people overreact much too often.
ADP stands for - ALWAYS DUMB PREDICTION!
let the cheerleading begin
a 47 ism is a good number
8000 jobs a month aint too shabby
The economy has changed. The majority of people work in rather unproductive but secure jobs such as government, eduction and healthcare. That’s why overall as a country we aren’t getting much much more wealthy. The folks have their jobs however no matter what. Look how much job growth over the past few years has been inn government and healthcare - most of it.
You should not use “ain’t” in a column. It is poor style.
Chris, I agree with you. We are not in a recession. I have a job and my neighbors have jobs too. However, it is likely that we will be in recession in the first half of the year though. My point is, the job growth data is not good as some people suggest. In order to avoid bubbles, we need to stop seeing such growth numbers as “good” just because the numbers are higher than expectations.
ADP capture small to mid-sized firms which are already lean. ADP does not supply payroll for Citi, Bear, and other large firms holding heads steady or taking the axe to them. Discount the ADP report.
ADP report is accurate.
ADP is a business. And they do have large as well as small customers.
The labor department are basically workfare jobs and shouldn’t be trusted.
Go with ADP.
WSW:
8000 jobs a month aint too shabby!
By the way, we are also having 8000 foreclosures PER DAY!
You figure out which will impact our economy the most…
Foreclosures are good. (They remind everyone that if you want something, you must actually pay for it). Welfare is bad. (It implies that if you want something, someone else should be forced to give it to you). Journalists and Litigation Attorneys should bear the tax burden of the entire nation. That would be paradise!
The payroll numbers don’t look right.
I believe it does not count underemployed as unemployed.
The unemployed numbers also dont account for contract workers who lost their jobs. And contract workers are amongst the first to lose their jobs in slowing down economy
Amar Harolikar
taxationindia.blogspot – for analysis
ADP report means what it means. 8000 new jobs added. In other words, meaningless in the evaluation of economic health.
Here is a formula that can be used to determine our true economic health -
Total number of jobs X income provided from those jobs.
Subtract out cost of living expenses and current debt.
The remaining number provides a better indicator of our country’s economic health.
This is simply a terribly inaccurate headline.
Employment is a notoriously noisy data serious, often substantially revised.
Regardless, a single data point cannot and will not determine if a recession will occur.
The market is so desperate for any good news that it will take the ADP report as being a sign that things will be alright. Don’t fall into that trap. My thoughts on this:
http://riskyops.blogspot.com/2008/03/risks-from-current-recession.html
Real Time Economics offers exclusive news, analysis and commentary on the economy, Federal Reserve policy and economics. The Wall Street Journal's Sudeep Reddy and Phil Izzo are the lead writers, with contributions from other Journal reporters and editors. Send news items, comments and questions to 
