January 6, 2011 in Business

Signs of job growth emerge

But Labor Department, ADP reports could vary significantly
Associated Press
 

Payroll provider ADP said Wednesday that the economy created nearly 300,000 private-sector jobs last month. Chances are the federal government will report a different number Friday – perhaps a much different one.

That’s because the government has its own method of calculation. In addition, it uses two surveys: One determines whether jobs have been gained or lost; the other sets the unemployment rate.

Still, the ADP report raised hopes that the Labor Department’s December figures will show that employers are ramping up hiring. The economy has grown since the recession ended in June 2009, but job creation has been weak.

Economists’ consensus view is that the government’s report will show a net gain of 145,000 jobs and a drop in unemployment to 9.7 percent from 9.8 percent. But in light of the ADP report, some economists now think employers might have added 200,000 jobs.

Others are skeptical of ADP’s numbers, which in recent months have varied substantially from the government’s.

ADP draws its estimates from payroll data submitted by its 340,000 business customers. With help from economists at Macroeconomic Advisers, ADP then adjusts the data to account for differences between its customers and the makeup of the overall economy.

In the past year, ADP has reported about 65,000 fewer private-sector jobs per month than the government has. Last month, it reported that companies had created a net 92,000 jobs in November. By contrast, the government estimated the figure at 50,000.

But the disparity between ADP and the government tends to narrow over time: It’s averaged only 4,500 jobs per month over the past decade.

The Labor Department surveys 140,000 companies and government agencies that have 410,000 branches and offices. It’s a huge survey. It covers one-third of all employees, excluding the agriculture sector.

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