Since today (Wednesday March 2) is the first Wednesday of the new month, Automatic Data Processing (ADP) has released their monthly report estimating the new jobs for February for the private sector. As always, the economists were surprised. From Reuters:
(Reuters) – Private sector employers added more jobs than expected last month in a sign of steady improvement in the labor market, ahead of the closely watched non-farm payrolls report from the Labor Department on Friday.
Employers added 217,000 jobs in February, the ADP Employer Services report showed on Wednesday, above expectations for a rise of 175,000. January’s figure was revised higher by 2,000 to 189,000.
Economists said the private-sector hiring indicates improvement in the labor market, though they noted the month-to-month changes in ADP’s report are not always good predictors of Friday’s larger jobs numbers.
There is a quite simple explanation for why the month-to-month changes in the ADP report do not predict the larger report from the DoL Bureau of Labor Statistics. The BLS reporting includes jobs from all levels including the public sector which has been laying people off even as the pace of hiring has picked up a bit in the private sector.
Of course, even as there was some new hiring in February, layoffs also continued with Reuters also reporting this morning on a report from consultants Challenger Gray & Christmas on an increase in February of the numbers of planned layoffs:
(Reuters) – The number of planned layoffs at U.S. firms rose in February to its highest level in 11 months as government and non-profit employers let workers go, a report showed on Wednesday.
Employers announced 50,702 planned job cuts last month, the highest level since March 2010 and a jump of 32 percent from January’s 38,519, according to the report from consultants Challenger, Gray & Christmas, Inc. Layoffs were 20 percent higher than the 42,090 announced in February of last year, marking the first year-over-year increase since May 2009.
This doesn’t even begin to get to the jobs that will be lost with the budget cuts pushed by the Republican controlled House of Representatives. According to a report by Moody’s Analytic’s Mark Zandi (via the Washington Post), these cuts will mean 700,00 jobs lost from now through 2012:
A Republican plan to sharply cut federal spending this year would destroy 700,000 jobs through 2012, according to an independent economic analysis set for release Monday.
The report, by Moody’s Analytics chief economist Mark Zandi, offers fresh ammunition to Democrats seeking block the Republican plan, which would terminate dozens of programs and slash federal appropriations by $61 billion over the next seven months.
Zandi, an architect of the 2009 stimulus package who has advised both political parties, predicts that the GOP package would reduce economic growth by 0.5 percentage points this year, and by 0.2 percentage points in 2012, resulting in 700,000 fewer jobs by the end of next year.
Being the good little doobie that he is, the Benbernank is quoted by Reuters as testifying earlier today that the cuts will cause only 200k jobs to be lost. Now isn’t that special. From the Reuters report:
(Reuters) – Federal Reserve Chairman Ben Bernanke said on Wednesday a Republican spending cut plan would not cause a big dent to U.S. economic growth, but could cost around 200,000 jobs.
Bernanke said that a $60 billion cut along the lines being pursued by Republican in the House of Representatives would likely trim growth by around two-tenths of a percentage point in the first year and one-tenth in the next year.
“That would translate into a couple of hundred thousand jobs. So it’s not trivial,” he said in response to questions from members of the House Financial Services Committee.
Don’t you just love the parsing of his words there. The cuts won’t make a big dent but they aren’t trivial. Nothing like trying to please everyone and pleasing no one.
Of course, things are also not helped when the Law of Unintended Side Consequences comes into play as it has with the recent extension of the Bush (now Bush/Obama) Tax Cuts. It seems the tax cuts are also hitting state budgets to the tune of $5.3B.
Struggling states could lose as much as $5.3 billion in tax collections during the next few years in an unintended consequence of one of the lower-profile federal tax cuts that President Obama signed in December, according to a report released Tuesday.
The tax-cut package the president signed in December is best known for extending the Bush-era tax rates for two years and giving a one-year payroll tax cut to most Americans. But it included a business tax cut that could blow a hole in state budgets: a provision allowing businesses to deduct the full value of new equipment purchases from their taxes through 2011.
That cut, intended to spur the economy by encouraging businesses to spend more money on equipment, could end up costing 19 states as much as $5.3 billion in lost revenue over the next few years, according to the report, by the Center on Budget and Policy Priorities, a research organization based in Washington.
The 19 states stand to lose money because they link their state tax laws to federal tax law. So the newly allowed federal tax deductions that businesses in those states take will lower their taxable incomes, which would in turn have the effect of driving down state corporate and income tax collections.
So we wait until Friday for the official BLS Jobs Report. I usually don’t put a number on the figure of new jobs since I’m not an economist that is always surprised that my figure is wrong. I will however make the bold prediction that the number of new jobs reported Friday for February will be less than half the 217k reported by ADP today. But we shouldn’t worry, Tom Brokaw tells us that all we need are new skills and all will work out in the end.
And because I can:
Cross posted from Just A Small Town Country Boy