Payroll processor ADP released its ADP National Employment Report on Wednesday, which found the private sector added 216,000 jobs during the month of February.
Traditionally a precursor to official government employment figures set for release Friday, the report also found manufacturing employment increased 21,000, while construction employment advanced 16,000 and the financial-services sector added 14,000 jobs during that period.
While these figures are undoubtedly good news for the private sector battered by high unemployment and anemic growth, it’s far too early to celebrate, says Russell Investments’ chief economist Mike Dueker, who adds that recent unemployment figures are in part the result of people no longer looking for work.
“Our forecast is a bit lower than the consensus,” Dueker says. “They’re predicting 210,000 to 215,000 jobs in Friday’s report, while we expect the number to be around 170,000. We believe that figure will also be the average for the remainder of the year, and don’t expect any individual month to get above 200,000 jobs. We think that plateau will be 190,000 jobs.”
Dueker notes that Russell is a member of a blue chip panel, and his forecast is the most optimistic of those released by the other member firms.
“We expect the economy to grow by 2.5%, while the other companies on the panel expect the economy to grow by only 2.2%,” he says.”We believe there will be a 1% increase in employment coupled with 1.5% of productivity growth, and that’s how we arrived at that 2.5% figure.”
As to events in other parts of the world, Dueker believes it was smart for China, in particular, to reduce its growth estimates to more reasonable levels.
“They used to have this ‘damn the torpedoes’ mentality when it came to their economy,” he explains. “The always thought they could increase domestic spending if needed to address growth shortfalls. They have now changed their attitude on that, and it's a good thing."