January 8, 2014

December ADP Private-Sector Employment: +238K; Nov. and Oct. Now Both Over 200K (See Conference Call Notes)

Filed under: Economy — Tom @ 8:38 am

The breakdown of the 238,000-job gain (vs. expectations of 215K):

  • Small businesses (1-49 employees) +108,000
  • Medium businesses (50-499 employees) +59,000
  • Large businesses (500 or more employees) +71,000

The press release:

“The U.S. private sector added 238,000 jobs in December, surpassing November as the strongest month for job growth in 2013,” said Carlos Rodriguez, president and chief executive officer of ADP. “It’s encouraging news that hopefully bodes well for 2014.”

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market ended 2013 on a high note. Job growth meaningfully accelerated and is now over 200,000 per month. Job gains are broad-based across industries, most notably in construction and manufacturing. It appears that businesses are growing more confident and increasing their hiring.”

Conference Call Notes with Mark Zandi:
- Very good report, broad-based on industries and company sizes.
- Solid gains in const. and manufacturing.
- “Feels like the job market has kicked into a higher gear.”
- “Consistent with other economic data.”
- “Q4 GDP growth is tracking at 4%.” Job gains are consistent with that.
- Business confidence has surged since the shutdown and “is at a new record high.”
- “My sense is that businesses are now feeling good and engaging and hiring rates are finally picking up. … It feels like it’s happened.”
- At this pace of job growth, unemployment will decline quickly, and will be close to 6.5% by YE and to 6% by YE 2015.” (He thinks full employment is 5.5% to 5.75%).
- But we should still extend unemployment benefits, and paying for it “should not be a pre-condition.”
- We’ve had a lot of false starts during the 4-1/2 year recovery. This time it feels real, and we’re off and running. We’ll now see a recovery more typical of previous recoveries.


MY Question (shutdown impact and part-timers):
- Surprised that shutdown had little impact — but confidence improved after it was over, and #s went up further.
- Shutdown might have been therapeutic.
- Hasn’t seen meaningful impact on PT employment. (“no significant increase”) May show up next year when -er mandate kicked up.

Rugaber of AP (GDP components):
- 3.5% is median.
- Inv. growth in Q4 doesn’t seem as low as one might think. ($75 bil increase [probably annualized -- Ed.]  in Q4 vs. $105 bil in Q3). Farm inv buildup is real because of PY drought and farmers holding onto their stocks.
- Predicts 225K per month for 2014.

Needham (The Hill – re UI extension and Fri. jobs prediction):
- 230K is prediction for Friday with unemp rate staying at 7%, though some indicators are foreshadowing a decline. If not in Jan., rate will decline in early 2014.
- Govt. employment is stabilizing.
- UI “should be allowed to die a natural death” and sort of wind down on its own. By the end of the year it should be all but gone except it troubled states like IL, NV, and RI.
- Lawmakers should work really hard to pay for it “over a period of time.”
- We’re mostly past the “emergency” part of the UI problem.
- Shouldn’t make paying for it a precondition for passage.
- There has been a significant improvement in the “flows out of unemployment.”



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