Wednesday, March 31, 2010

ADP Sees Job Loss of -23,000

From ADP:

Nonfarm private employment decreased 23,000 from February to March on a seasonally adjusted basis, according to the ADP National Employment Report®. The estimated change of employment from January 2010 to February 2010 was revised down slightly, from a decline of 20,000 to a decline of 24,000.

The March employment decline was the smallest since employment began falling in February of 2008. Yet, the lack of improvement in employment from February to March is consistent with the pause in the decline of initial unemployment claims that occurred during the winter.

Let's go to the data:

First, service industries are adding jobs and have been for the last several months. Goods producing industries are still the laggards. Also notice that small firms are the ones adding the most jobs.

Bloomberg highlights the primary reason for the last of growth:

Companies are still hesitant to add workers until they see sustained sales gains and are convinced the economic recovery has taken hold. Economists surveyed by Bloomberg News anticipate the government’s report April 2 will show payrolls increased by 184,000, in part due to temporary hiring by the federal government to conduct the 2010 census and because of better weather compared with February.

This is what economists call "visibility" -- it refers to the comfort people have looking out a few years and saying, "I see growth". The problem is right now there is little to no visibility; hence, we're still seeing modest job cuts.