Is the Labor Market Strengthening Despite Economic Contraction?

The ADP National Employment Report for January showed that 192,000 non-farm private-sector jobs were added for the month. This is a 3.7 percent gain from December, a 12.3 percent drop from January 2012, and the sixth consecutive month of increasing job growth.

The results came in ahead of consensus estimates for about 172,000 jobs, which, if accurate, would have represented a month-to-month decline in the rate of job creation. But the labor market continued to strengthen, with small businesses, defined as those with 49 or fewer employees, adding 59 percent of jobs for the month. Medium businesses, defined as those with between 50 and 499 employees, added 41 percent of jobs. Large businesses lost 2,000 jobs.

January’s numbers pull the six-month average up to 153,000, and the three-month average up to 183,000, suggesting positive momentum in the labor market. These results will be tempered with Thursday’s weekly initial unemployment claims figures, and together with Friday’s major employment situation report will paint a robust picture of how well the labor market is doing. Whatever the employment situation looks like at the end of the week will be paired with the government’s preliminary fourth-quarter GDP estimates, which show contraction of 0.1 percent.

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