ADP National Employment Report Says Job Market Improving in US
The recent ADP National Employment report seems to have some good news. According to the report, approximately 172,000 people found new employment in the private sector since June. Of course, this is about 1,000 lower than the same metric in May, but the fact that people are finding work is a welcomed change from years past.
“The labor market does not seem to be faltering. The apparent willingness of small business owners to bring on new workers is a clear sign that the economy is moving forward solidly,” explains Joel Naroff, who is the chief economist at Naroff Economic Advisors, located in Holland, Pennsylvania.
And it seems that small/private business is leading the charge. The majority of these new payrolls—about 95,000 new employees—came from no more than 49 small companies. While overall payrolls increased at a lower rate since May, these private payrolls are up from 11,000 in May.
Ahu Yildirmaz is the vice president and head of the ADP Research Institute. He advises, “Since the start of 206, average monthly job creation has slightly dropped. Lackluster global growth, low commodity prices, and an unfavorable exchange rate continue to weigh on US companies, especially larger companies.”
Furthermore, the ADP report showed that this 172,000 payroll growth significantly beat market expectations of 159,000. This, of course, could be the beginning of positive momentum. Ian Shepherdson, of Pantheon Macroeconomics, notes, “In general, claims have remained encouraging, consistent with a strong gain in payrolls in tomorrow’s report for June after the disappointing May data.
Now, the ADP report is not, generally, considered to be a reliable predictor of non-agricultural payrolls because of varying degrees of methodology. However, it can be seen as an overall good sign.
For example, the ADP report does not take into account things like strikes; it does not consider the return of the 35,100 Verizon workers who had been originally excluded from the data.
As such, JPMorgan economist Daniel Silver, adds, “Adjusting for the strike, the ADP report suggests that the employment report’s private payroll count should be up 207,000. That said, the ADP and the government’s employment data do not always align very well.”
Still, any sign of growth at all is a good thing and this likely does help to signal new hope in the American workforce.