According to data released by the Bureau of Labor Statistics, private sector firms employed more workers than expected in February and the previous month’s data was revised considerably upward to indicate robust employment gains instead of losses.
The winter wave of COVID-19 infections caused by the Omicron variant, according to the ADP National Employment Report released on Wednesday, signaled that the economy was on stable ground. In light of this, some economists have questioned whether the figures for January can be trusted.
Last month, private payrolls grew by 475,000 people. Instead of shedding 301,000 jobs, employers added 509,000 positions in January. Reuters polled economists and predicted that private-sector payrolls would increase by 388,000 jobs.
Michael Pearce, a senior economist at New York’s Capital Economics, said, “Huge revisions undercut ADP’s credibility. However, the ADP data are essentially meaningless after the 301,000 recorded decline in January was revised to a 509,000 gain in February.
ADP chief economist Nela Richardson, though, said changes were part of the process, drawing comparisons to the Labor Department’s Bureau of Labor Statistics, which prepares the carefully watched monthly employment report.
The BLS has also drastically altered its estimates during the course of 2021, according to Richardson’s analysis of the most recent three months, such as November and December (data). In my opinion, it’s crucial to keep in mind the general trend. More than 6 million new employment will be produced by 2021, according to both the NER and the BLS.
As a cooperative effort between ADP and Moody’s Analytics, this analysis was released before the BLS’ more complete and frequently regarded employment data was released on Friday. Because of variations in methodology, it has a poor track record of accurately predicting the BLS employment report’s private payroll figure.
However, despite the original ADP estimate showing a decline in private payrolls for the first time in a year in January, BLS data shows that the private sector employed 444,000 people, with significant increases to job gains in November and December.
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Is The February Count Wrong?
Small company employment fell by 96,000 in February, according to the ADP data, which could be a sign of a slowdown in the economy.
Joel Naroff, the chief economist at Naroff Economics in Holland, Pennsylvania, remarked, “This group (small enterprises) is often the canary in the coal mine.” It is likely that the ADP data overestimated the number of workers employed in February, but I am not arguing that we are heading to a dramatic slowdown in employment growth or even a decrease in payrolls.
Businesses are still having a hard time recruiting employees. Despite widespread complaints of a labor shortage, the Federal Reserve’s Beige Book released on Wednesday indicated “scattered signs of increasing labor supply, although widespread high demand for employees remained constrained.”
On or before February 18, the report was based on data. At the end of December, there were about 10.9 million job opportunities, which was a new high.
As the labor market becomes more constrained, inflationary pressures rise. This month’s interest rate rises will go ahead, but the outlook is “very uncertain” because of the conflict in Ukraine, Fed Chair Jerome Powell told legislators on Wednesday. Read more
There could be as many as seven rate rises this year, according to analysts. Stocks on the New York Stock Exchange rose in value. Against a basket of currencies, the dollar dropped. Government bond yields increased.
Gus Faucher, the chief economist at PNC Financial in Pittsburgh, said, “We predict the limited effect on the US labor market, but there are substantial negative risks in the months ahead.” European recession, rising energy prices, and the increased chance that the Fed would be obliged to hike interest rates so aggressively to combat inflation might all have a negative impact on the US economy’s ability to recover.
In February, it appears that employers continued to hire at a rapid pace. According to data from payroll scheduling and tracking provider Homebase, the number of employees working and the number of hours worked went up significantly in mid-February.
Shift work in February grew at its fastest pace since the spring of 2020, according to a report from the UKG. Because of this uptick, the Omicron variation of COVID-19’s influence on hourly shift work has faded, according to the workforce management software provider.
Employment increases are expected to continue to rise in February. According to a Reuters poll of experts, nonfarm payrolls likely grew by 400,000 jobs after increasing by 467,000 in January. In February, private sector employment is expected to have grown by 378,000 jobs.
Chizu Nomiyama, Andrea Ricci, and Jonathan Oatis edited the story. The Thomson Reuters Trust Principles are our guideposts.
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