ADP: US Private Employment Growth Accelerated In November

US companies added 217,000 workers in November, according to this morning’s update of the ADP Employment Report. The gain—the most since June—marks a modest improvement over October’s upwardly revised increase of 196,000. The faster rate of growth offers a degree of support for the government’s numbers that show a dramatic rebound in payrolls in October. But even after today’s upbeat release from ADP, the year-over-year trend continues to slip for this dataset.

Private-sector payrolls advanced 2.06% for the year through November, fractionally below October’s 2.13% rise. That’s a tiny and arguably insignificant round of deceleration. Nonetheless, the latest downtick is the tenth straight month of lower annual increases. For the moment, however, the downward bias isn’t particularly worrisome… as long as growth holds above the 2% pace, which is strong enough to lower the jobless rate and keep the economy moving forward.

“The current pace of job creation is twice that needed to absorb growth in the working-age population,” said Mark Zandi, chief economist of Moody’s Analytics, which produced today’s report in collaboration with ADP. “The economy is fast approaching full employment and will be there no later than next summer.”

Today’s update suggests that Friday’s official November jobs report from Washington will stick close to the sharply higher level of growth in October, when payrolls increased by 268,000, according to the Labor Department—nearly double the rise in the previous month.

Econoday.com’s consensus forecast, however, sees private payrolls rising 185,000 in Friday’s report for November—well below October’s advance. But after reading today’s ADP data for November, should economists raise expectations? Yes, but only modestly.

Plugging in today’s ADP numbers to make a forecast for Friday’s report via a linear regression model implies that the government’s figures will show an increase of 218,000 private-sector jobs for November (based on the point forecast). That’s still well below October’s rise. Nonetheless, using this forecast as a guesstimate leaves room for thinking that the labor market will continue to show a healthy expansion rate in the upcoming release from the Labor Department.