Wednesday, August 03, 2011

ADP Reports 114,000 Jobs Added in July, But There's Still a 6 Million "Private Job Deficit"



"Employment in the U.S. nonfarm private business sector rose 114,000 from June to July on a seasonally adjusted basis. The advance in employment from May to June was revised down modestly to 145,000, from the initially reported 157,000.

Employment in the service-providing sector rose by 121,000 in July, marking 19 consecutive months of employment gains. Employment in the goods-producing sector fell by 7,000 in July, the second decline in three months. Manufacturing employment decreased 1,000 in July, which has seen growth in seven of the past nine months. Employment on small payrolls (<50 workers) rose 58,000 in July, while employment on medium payrolls (50 to 499 workers) rose 47,000. Employment on large payrolls (500 or more workers) rose a smaller 9,000.

Today’s ADP report suggests that employment continued to advance at a moderate pace in July. This gain of employment growth is moderately above the consensus forecast for Friday’s jobs number from the BLS, and this pace of job creation usually implies a steady unemployment rate. However, employment growth is decelerating. Since February, the three-month percent change has declined every month, from 0.60% then to 0.27% in July.

The slowdown in employment makes more sense in light of last week’s revised GDP numbers showing the economy grew slower late last year and this year than initially reported.

MP: The chart above of monthly changes in private payrolls shows that the U.S. economy has added almost 2 million jobs since February 2010, at an average pace of about 106,000 new jobs per month.  But there were almost 8 million private jobs lost in 2008 and 2009, so it would take more than four more years of job creation at the current pace just to replace the remaining 6 million "private job deficit." 

9 Comments:

At 8/03/2011 9:55 AM, Blogger Hydra said...

Four years is a long time to be out of work.

 
At 8/03/2011 9:55 AM, Blogger Michael E. Marotta said...

It maybe a Hayekian problem that something we can measure so well might not tell us what we need to know.

As the largest processor of payrolls ADP may be in a better position than the government to gather employment data. There is no doubt that the dollar value of the productive hours of the people working for firms is a reflection of economic activity. And we can know this to two decimal places.

But one way or another, we all have to eat. Government payments to the unemployed were always only a fraction of the lost gross wage. And they expire. How many of those unemployed 2006-2008 now work for themselves?

When people sell stuff on eBay and Craig's List, we have no easy way to count that as income; no reporting agency tells us the numbers. (Technically, the IRS does call that income; the practical reality is that sellling your lawn mower does not really bring you a tax liability to the IRS: they fry other fish.) But if we were firms reducing inventory, it would be income, not only taxable (minor point), but counted as economic activity.

A recent Reason-TV horror story from Oak Park, Michigan, (suburb 15 mi NW of Detroit) told of a woman harrassed by the township council for her vegetable garden. There is no way to tally the value of what is little more than a hobby, but which literally puts food on the table.

As a reductio, if total automation caused total unemployment while reducing the cost of consumer goods to near zero, how would that look in numbers?

I am happy that more people are working and that at least some of this can be measured. But I wonder what the back story is. How is econometrics tied to moral philosophy?

 
At 8/03/2011 10:18 AM, Blogger rjs said...

we're losing ground...you need 125K jobs per month just to cover the increase in the working age population...

 
At 8/03/2011 10:35 AM, Blogger Junkyard_hawg1985 said...

While ADP points to a 2 million increase in jobs since Feb 2010, the data from the BLS shows a much smaller result. According to the household survey, there were 138.698 million Americans working in Feb 2010 vs. 139.334 million in June 2010. This is an increase of only 636,000 jobs over a 16 month period. I suspect the difference between the two series is the inclusion of government job losses.

More troubling is that this same series shows we are down 530,000 jobs since the local peak of 139.864 million jobs in March 2011. The unemployment rate is also up 0.4%. This change in unemployment seems pretty consistent with the GDP numbers and Okun's law.

I suspect state and local governments cut jobs sharply in July with the start of the new budget year. It will be interesting to see Friday's job report.

 
At 8/03/2011 11:08 AM, Blogger Che is dead said...

"... if total automation caused total unemployment while reducing the cost of consumer goods to near zero, how would that look in numbers?"

I don't know about the numbers, but it sure looks interesting in all those episodes of Star Trek.

 
At 8/03/2011 12:35 PM, Blogger Paul said...

Meanwhile, we have a President waging war on capitalism. He leaves untouched low hanging fruit like the pending trade treaties and offshore drilling. His radical EPA is shutting down coal-fired plants. His socialist health care system coincided with a hiring plummet. His ruinous spending threatens America's AAA credit rating. And yet he and his idiot worshippers still blame it all on Bush.

But hey, here's an idea. How about The Fed run the printing presses until the plates melt. Surely, that will fix everything.

 
At 8/04/2011 8:28 AM, Blogger morganovich said...

Aug 3 (Reuters) - The number of planned layoffs at U.S. firms rose to a 16-month high in July as sectors which had been seeing fairly few layoffs unexpectedly bled jobs, a report on Wednesday showed.

Employers announced 66,414 planned job cuts last month, up 60.3 percent from 41,432 in June, according to a report from consultants Challenger, Gray & Christmas, Inc.

July's job cuts also were up from the same time a year ago, rising 59.4 percent from the 41,676 job cuts announced in July 2010, and recording the largest monthly total since March, 2010.

"What may be most worrisome about the July surge is that the heaviest layoffs occurred in industries that, until now, have enjoyed relatively low job-cut levels," John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.

 
At 8/04/2011 8:34 AM, Blogger morganovich said...

this is a very interesting pattern in the job growth data:

http://www.coyoteblog.com/coyote_blog/2011/07/someone-must-have-been-reading-my-blog.html

it pretty much stopped when obamacare passed.

certainly, correlation is not causation, but in this case there are some strong reasons to suspect a causal relationship.

FDR did the same exact thing with many of his programs. they up uncertainty and perceived costs of hiring, so everyone pulls back.

one of the major issues in the depression was business uncertainty about heavy levels of government interference/regulation/activity in their markets.

we have the most economically intrusive government since FDR, and surprise we are getting the worst employment recovery since then?

 
At 8/04/2011 8:35 AM, Blogger morganovich said...

"if total automation caused total unemployment while reducing the cost of consumer goods to near zero, how would that look in numbers?""

it would barely show up.

real GDP is nominal/inflation.

if you lose 99% of your nominal output because prices fall 99%, GDP is unchanged.

if all goods became free, GDP would be infinity.

 

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