ADP Eyes Job Gains; Moody’s Projects CMBS Surge

ADP reports that job gains seem to be continuing as last month's numbers spike above the six-month average.

It’s the time of the month when Automatic Data Processing Inc. issues its jobs numbers ahead of the U.S. Department of Labor, whose own update is due at the end of the week. ADP reported on Wednesday that private-sector employment increased from December to January by a seasonally adjusted 187,000.

Of course, ADP’s estimates have been known to conflict with Labor’s reckonings more than a few times. In fact, for some months running now, ADP has released higher employment numbers than Labor, though sometimes ADP revises them downward later (as was the case with the November to December report, revised down by 50,000 to 247,000 jobs added). Still, the firm points out that “the recent pattern of rising employment gains since the middle of last year appears to be intact, as the average gain over December and January (217,000) is well above the average gain over the prior six months (52,000).”

Separately, Challenger, Gray & Christmas Inc., the outplacement consulting firm, reported on Wednesday that U.S. companies planned to cut only about 38,500 jobs last month, down 20 percent from December and the lowest number of planned layoffs since the summer of 2000. Still, the company noted that there could be an uptick in layoffs this year as states and other governments grapple with their budget problems–and one time-honored way to do that is by firing workers.

CMBS to Expand in 2011

Moody’s Investors Service said in a report on Wednesday that it expects higher new issuance volume and greater ratings stability for outstanding commercial mortgage-backed securities in 2011, as the U.S. commercial property markets crawl back to some semblance of normalcy. “Trifurcated” is the term that Moody’s used to describe the new reality: rising prices for larger trophy assets; sharply declining prices for distressed assets; and essentially flat prices for smaller but healthy properties.

The factors driving the resurgent CMBS market include, according to Moody’s, stable or increasing values (at least for the non-distressed properties); higher transaction volume; and greater liquidity for commercial real estate in 2011.

All together, Moody’s predicts CMBS issuance this year to hit $37 billion. “The combination of borrowers seeking low interest rates and investors seeking higher yield led to a three-fold increase in issuance in 2010 over 2009, with deal size and deal diversity also increasing,” noted Moody’s managing director Nick Levidy in a statement. “Based on what is already in the pipeline, we anticipate those trends to continue and accelerate in 2011.”

Construction Slides Further in the Dumps

According to a report from the Census Bureau, U.S. construction spending slipped by 2.5 percent in December to an annualized rate of $787.9 billion, the lowest level since the summer of 2001. Private-sector construction spending on construction declined 2.2 percent, while public expenditures dropped 2.8 percent. The largest drop by far was for residential construction, down 4.4 percent.

Wall Street had a lackluster day Wednesday to follow its bouncy mood, with the Dow Jones Industrial Average eking out a gain of 1.81 points, or 0.02 percent. The S&P 500 lost 0.27 percent and the Nasdaq was down 0.06 percent.