With new highs in the Stock Market we get News of rising unemployment...
ADP report shows 'sluggish' 78,000 jobs gained
Marketwatch - October 04, 2006 3:52 PM ET
WASHINGTON (MarketWatch) - The U.S. economy added about 78,000 private-sector jobs in September, another month of "sluggish" hiring, according to the monthly ADP employment report released Wednesday.
"These findings indicate continued sluggish gains in private-sector employment," said Joel Prakken, chairman of Macroeconomic Advisers LLC, the economic firm that computes the ADP index from anonymous payroll data provided by Automatic Data Processing Inc. (ADP).
The ADP report covers private-sector jobs only. After adding in the government jobs left out of the ADP index, the report indicates nonfarm payrolls rose by about 95,000 in September, Prakken said. That would be the weakest job growth since last September and October, just after Hurricane Katrina hit the Gulf Coast.
"I would not characterize the labor market as dangerously soft," Prakken said in an interview. "It's consistent with our forecast that the unemployment rate will edge up' above 5% in coming months. The unemployment rate is currently 4.7%, near the lows seen in this business cycle.
Prakken said the economy retains some fundamental strength outside the weakening housing and auto sectors. Incomes are growing and the recent gains in the stock market should offset some the negative wealth effect felt by households from the slowdown in housing. Capital spending by businesses looks "pretty good."
The ADP report comes two days before the Labor Department reports on September nonfarm payroll growth. Economists surveyed by MarketWatch are currently looking for payrolls to grow about 124,000, after 128,000 in August.
Economists at Action Economics revised their payroll forecast lower by 10,000 to 115,000 following the ADP report and a weak Hudson Employment Index, which fell to 100.5, the lowest this year.
"The survey strongly suggests that the softer trend of recent months continues, and it might be starting to deteriorate further," said Ian Shepherdson, chief U.S. economist for High Frequency Economics.
In August, the ADP report said private-sector jobs grew by 107,000 in August, very close to 111,000 reported by the Labor Department.
The ADP report is considered by some to be the best single predictor of the government's nonfarm payroll report, but its record has been spotty since being rolling out in public in April.
The ADP report got it wrong in June, when it forecast private-sector gains of 368,000, while the government report showed just 107,000 new jobs created in the private sector and an additional 27,000 government jobs.
The ADP sample is taken during the same week of the month as the government survey, using similar techniques to sample data from about 263,000 business sites covering about 17 million workers. Roseland, N.J.-based ADP provides payroll and human-resources services to about one of every six U.S. workers, at more than 500,000 companies
The ADP index is constructed to mirror the government report in coverage of industries, firm size and region, Prakken said.
In other reports, the Institute for Supply Management said its nonmanufacturing index slipped to 52.9% in September from 57.0% in August, the lowest reading in three years. Details of the report, however, were more upbeat. See full story.
Also, the Commerce Department said orders for factory goods were unchanged in August, as soaring demand for military equipment offset declining orders for electronics, electrical equipment and oil. |
