Richard DeKaser: Job reports show strengthening economy

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JEREMY HOBSON: Now let’s get to this morning’s jobs news. The payroll processing company ADP said private employers added 187,000 jobs last month. And the job placement firm Challenger Gray and Christmas told us last month saw the fewest layoff announcements of any January since records started in 1993. Both of these reports are part of the lead up to Friday’s big jobs report from the Labor Department, which is considered the most important economic indicator of the month.

Let’s go now to Richard DeKaser. He’s an economist with the Parthenon Group and he joins us from Snowy Boston. Good morning Richard.

RICHARD DEKASER: Good morning.

HOBSON: So what’s your take on these numbers?

DEKASER: Well there’s no question — they’re good. You know the private sector numbers we got from ADP were especially encourage. 187,000 during the month of January. Last month in December we saw big gain — people were dismissing that as potentially fluky, but you don’t get two flukes in a row, so that looks solid, and as you just said, the Challenger numbers are — for January especially when things tend to be rough — the best we’ve seen in a very long time.

HOBSON: Well we spoke with John Challenger, Richard, this morning. We spoke with him, and he said that the cuts that they are seeing or did see in January are coming from state government and from governments. And he said that that could increase as the months go forward as states try to cut their budgets by a lot. Do you think that could send these jobs numbers going the other direction?

DEKASER: No I don’t, and the simple math is this: State and local governments account for about 15 percent of our employment base. The private sector is around 83 percent. over the past year, private sector pay roll is up 1.3, state and local payrolls down 1.3 percent. They just don’t have the heft and the size to pull the entire economy down. It will be a problem sector, but again, not problematic enough to offset the rest of the economy.

HOBSON: All right, Richard DeKaser, economist at the Parthenon Group, thanks so much.

DEKASER: My pleasure.