This morning payroll giant Automatic Data Processing announced its monthly payroll survey results. The numbers are encouraging vis-a-vis the unemployment rate in the United States. In January the private sector added 187,000 jobs. This compares to an expected result of 143,000 by an consensus of economists.
However, December’s gigantic jobs add number was revised significantly downward to an increase of “only” 247,000 relative to the earlier reported increase of 297,000.
Analysis: This news is very positive for the economy. More jobs is more money in the pockets of each of us. More money in the pockets is likely to lead to a more confident consumer. A more confident consumer will likely spend more and that will embolden businesses to do even more hiring. In effect this is a very, very positive thing for gross domestic product (GDP).
Another encouraging sign is that 97,000 of these new jobs are thought to have been added at small employers. The reason I say that’s a good thing is that large businesses are sitting on lots of cash and yet they are not spending it. Typically the more risk averse class of business is small business. Thus, once big businesses start hiring there should be a magnified effect that will bring the unemployment rate down more quickly.
Importance grade: 9; this year is going to be the year in which the unemployment rate of the United States finally starts to come down. This data from ADP today, when combined with December’s data, is a solid foundation for hiring for the entire year.
Jason
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