Slow and steady wins the race
Though American companies didn't add quite as many names to their payrolls in January as experts had hoped, jobs growth in the goods producing sector (manufacturing, construction and mining) was strong, and economists take that as a positive sign.
The government's official, bona fide, genuine-issue jobs report comes out Friday morning, but today we got an early hint from the payroll company ADP, which adds up private sector jobs that it processes. In January, ADP says there were 170,000 people added to payrolls, slightly under the 182,000 experts predicted. In addition, ADP revised its strong December number of 325,000 down significantly to 292,000.
Joel Prakken is the senior managing director of Macroeconomic Advisors, the group that issues the report with ADP. He says, "In the fairy tale, slow and steady wins the race, but I wish we were running a little bit faster here in terms of job creation."
Still, he says, there was genuine strength in the numbers the last two weeks if you look beyond the headlines. The service sector of the economy added 152,000 jobs, but it was the goods producing sector -- manufacturing, construction and mining -- that added 18,000, with more than half coming from manufacturing.
According to Prakken, while manufacturing isn't strong enough to help get us out of unemployment hole yet, these numbers are heading in the right direction.
Also on the bright side was information about who's doing the hiring. Some 95,000 of the 170,000 jobs added in December came on the payrolls of small businesses (defined as having between one and 49 employees). It's a good sign when small business owners are confident enough about the economy to start hiring. And, Prakken adds, "Small businesses are much less likely to be international in scope, and they, therefore, could give a better reading on sentiment about the circumstances of the U.S. economy."
In economist speak, that means slow and steady is still perhaps on track to win this race back to better employment.