Job Growth May Triple Forecast

Automatic Data Processing released their November jobs report today, showing private employment growing by 189,000 for the month.

Adding in public-sector employment, that suggests Friday’s Labor Department payroll report would show an increase of more than 200,000 total nonfarm jobs. October’s Labor Department report came in with a surprise gain 166,000 jobs.

The ADP report is not always a wonderful predictor of the Labor Department number.  But if it hits close to the mark this month, it will mean November job creation more than tripled the forecast of 65,000 new jobs.

What's more, it would mark the fifth consecutive month of job growth acceleration.  Aren't we supposed to be teetering on the brink of recession?  Isn't fourth quarter output growth supposed to be dreadfully anemic, somewhere shy of 1.0%?

It's true that solid job creation doesn't necessarily indicate solid output growth.  We could muster a lot more confidence in the economy's growth rate if only we were assured that the productivity of all that swelling workforce is holding up.

Worker productivity roared ahead at the fastest pace in four years in the summer while wage pressures dropped sharply.

The Labor Department reported Wednesday that productivity, the amount of output per hour of work, was up at an annual rate of 6.3 percent in the third quarter, the best showing since the summer of 2003, and far bigger than had been expected.

The caveat here is that the rosey economic data makes it somewhat less likely that the Fed will give us the good stuff (a 0.5% rate cut) next Friday.  As the primary risk shifts away from slowing growth and back toward inflation (though perhaps not significantly so, given the easing wage inflation), we're more likely to see a quarter point cut or perhaps none at all (though the goose egg scenario is thought to be unlikely).

While a smaller-than-expected Fed rate cut may ward off what could otherwise be a nice Santa Claus rally in the stock market, Bernanke's prospective Grinchiness would be an indication not that we can't have the medicine, but that we don't need it.

So, while we can't rely on the ADP number to pinpoint Friday's Labor report, as long as it's within 200,000 and therefore positive, we will have seen the Bush economy extend its all-time record job creation streak to 51 months.  At times like these, it's instructive to look back on what Hillary Clinton said three months ago in the 48th month of that streak, cherry-picking an anomaly in the data that was corrected a month later.

We could close this gap, create more employment at a time when our economy desperately needs more employment, and create millions of new jobs that will get us over this, you know, barrier that we're not creating jobs.  We lost 4,000 jobs in our economy last month.  We're not seeing the job creation.

I am.