ADP published its monthly National Employment Report today, and the numbers showed that the private sector added to payrolls for the fourth consecutive month. The report indicated that private payrolls expanded by 55,000 jobs in May, and the number of private jobs added in April was revised from 32,000 to 65,000.
Unlike the Bureau of Labor Statistics’ nonfarm payroll report, the ADP report does not factor in government jobs. For this reason, the report stated “it is reasonable to expect that Friday’s figure for nonfarm total employment reported by the BLS will be considerably stronger than today’s estimate for nonfarm private employment in the ADP Report”.
The report continued “The slow pace of improvement from February through May is consistent with the pause in the decline of initial unemployment claims that occurred during the winter months”. That the ADP report is showing gains is important, because it means that the private sector is increasing hiring, not just the government. While the government often hires people for the sake of providing jobs to people, the private sector will not add payroll unless it makes economic sense. The expansion in payrolls would seem to indicate that the economy is in fact pulling out of the recession, albeit slowly.
The construction industry continued to be one of the hardest hit in terms of employment. Construction payrolls decreased by 41,000 jobs in May, following a decline in April of 42,000 jobs. This speaks to the continuing weakness in the housing market, which is lagging behind the rest of the economy despite very low mortgage rates.
The ADP report is a precursor for tomorrow’s nonfarm payroll report, which economists are projecting to be quite large. There is a very interesting piece by James Bianco on the excellent blog The Big Picture that discusses the wide array of economist predictions for the report, which range from +100,000 jobs to +750,000 jobs.
The May payroll number is going to be very significant. Where do you think it will come in? Let us know in the comments section below.
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