Private job survey shows stronger hiring

WASHINGTON A private survey shows U.S. businesses increased hiring in January compared with a revised December reading.

Payroll processor ADP said Wednesday that employers added 192,000 jobs in January. That is more than December's revised number of 185,000, which had initially been reported at 215,000.

The ADP report is derived from actual payroll data and tracks total nonfarm private employment each month. The increase in hiring occurred after Congress and the Obama administration reached an agreement on Jan. 1 to avoid sharp tax increases and across-the-board government spending cuts.

The ADP report showed that most of the gains came from small businesses with 49 or fewer employers. This group of firms added 115,000 jobs in January. Medium businesses, those with 50 to 499 employees, added 79,000 jobs during the month while large businesses cut 2,000 employees.

In a separate report Wednesday, the government said that the overall economy shrank from October through December at an annual rate of 0.1 percent. The weakness came from the biggest cut in defense spending in 40 years, fewer exports and sluggish growth in company stockpiles. The 0.1 percent drop in the gross domestic product in the fourth quarter was a sharp slowdown from 3.1 percent growth in the July-September period.

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The ADP report is a positive indication but not as accurate as it should be. Last month the ADP jobs report was overstated almost 40%(38.7%)versus the BLS USDOL release two days later. Both ADP and DOL reports should/could be made more accurate. It is interesting that ADP revised Decembers numbers by exactly half of the overstatement. We need to create between 125K-150K jobs month over month to keep up with population growth. Of course this does not include any unexpected pop. spikes (think immigration reform) but that is for another article. If the ADP variance is overstated the unemployment rate will remain unchanged. However, if accurate (or understated)coupled with people who fell off unemployment we may see a slight decrease in overall unemployment... we'll know Friday