Tuesday, July 29, 2014
Inquirer Daily News

Pace of hiring disappointing

Economics in a nutshell: Given the chaos in Washington, it looks like the private sector did its best to hire more people, though the pace was disappointing.

Pace of hiring disappointing

(AP Photo/Steven Senne)
(AP Photo/Steven Senne)

INDICATOR: October ADP Payroll Estimates/Help Wanted Online Demand

KEY DATA: ADP: 130,000; Small: 37,000; Medium: 13,000; Large: 81,000/Online Ads: down 257,900

IN A NUTSHELL: "Given the chaos in Washington, it looks like the private sector did its best to hire more people, though the pace was disappointing."

WHAT IT MEANS: How much Washington damaged October economic activity is something we are all wondering about and the monthly ADP estimate of private sector job gains is usually the first look at what might be happening in the labor market. It appears that firms did some hiring during the month. The pace was mediocre but not quite as terrible as feared. There are two divergent explanations: First, firms didn't think the shut down would continue and thus only modestly cut back on their hiring plans, or; Second, there would have been significantly more job gains if firms were not so worried about the future.

While it is unclear what best explains the soft but not disastrous growth in private sector jobs, a hint that there was a big cut back comes from the Conference Board's October Help Wanted Online survey. The number of jobs advertised fell sharply, wiping out a solid gain posted in September. The one logical explanation for this large reduction is the shut down and debt ceiling crisis made firms more cautious.

MARKETS AND FED POLICY IMPLICATIONS: Normally, the ADP report comes out just before the Bureau of Labor Statistics releases its estimates of job growth. With the government shut down, the official employment report will not be released this Friday but will come out on Friday, November 8th. Still, there is some hope that Washington didn't totally crush the labor market. The private sector did hire more people but firms slowed their hiring plans. That could also lead to lower hiring in the months to come. The Fed, like the rest of us, is largely clueless as to the extent of damage done by Washington so the better part of valor is to assume it was major and wait until the data come in.

About this blog
Joel L. Naroff is the president and founder of Naroff Economic Advisors, a strategic economic consulting firm in Bucks County. He advises companies across the country on the risks and opportunities that economic developments may have on the organization’s operating environment. An accomplished public speaker, Joel’s humor and unique ability to make economics understandable have brought him a wide following. Reach Joel at joel@naroffeconomics.com .

Joel Naroff
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