It is being reported widely that, according to an ADP report, the economy gained 55,000 private sector jobs in May. We'll know more when the government releases employment data tomorrow, though the government's hiring of 400,000 census workers will complicate the interpretation, but the estimated figure from ADP does not represent an employment gain. Remember that we need 100,000 to 150,000 new jobs each month just just to keep up with population growth, so even if this figure is accurate we still aren't making net gains in terms of accommodating new workers. And with millions of workers still unemployed, a growth rate for jobs that simply keeps up with population growth isn't enough, jobs need to grow faster than population growth if we are going to reabsorb the unemployed into the workforce. Job growth is better than job loss, of course, but we shouldn't get too excited about this figure (see Calculated Risk as well).
When figures are released tomorrow, the headline number could be as large as 540,000 according to some estimates, 400,000 of those being census workers and 140,000 in the private sector. It's likely that a number this large will be hailed as a significant advance for the labor market. And the 140,000 private sector growth would be a good number, much, much better than we've seen in a long time. But even if it is this large, it still barely covers population growth -- it won't do much if anything to make inroads on the existing unemployed -- and anything smaller than that won't even do that. Positive job growth is progress, but we shouldn't get too optimistic about labor market conditions until we are actually covering population growth and rehiring significant numbers of the unemployed (Brookings estimates the employment gap to be in the neighborhood of 11.3 million workers). Even if true number is slightly smaller than that, there are still millions and millions of unemployed workers who cannot find employment, are under employed if they do find work, or are too discouraged to even look. We need private sector job growth in the hundreds of thousands before labor markets will begin to heal, and we are nowhere near that figure yet. Hopefully we'll get there before too long, job growth in excess of 500,000 private sector jobs per month was a feature of previous recoveries, but we shouldn't assume that good times are just around the corner.