Economy Watch: January-Jobs-Numbers Predictions Are In

Both ADP and the ISM non-manufacturing employment index results are in, giving a prediction for January employment.

Dees Stribling, Contributing Editor

The Bureau of Labor Statistics is going to release its monthly employment numbers on Friday, and while monthly reports contain a certain amount of noise, the real estate industry pays attention—as it should. Jobs are the cream in the industry’s coffee, the salt in its stew. More jobs mean more people buying in stores. It means more goods moving through the distribution system. It means more people working in offices (or it used to mean that, anyway). And it means higher household formation, both in rental and for-sale housing. Of course, the employment picture’s more complicated than the monthly report or its headline numbers, but the report still offers critical nuggets of information.

Ahead of the official report, private entities take a stab at the employment picture. The ADP employment report, which was released on Wednesday, posted an increase of 213,000 private-sector jobs. Though ADP—which bases its numbers on payroll data—often doesn’t jibe with the BLS report, it sometimes suggests whether the official numbers will fall on the high or low side. In January, if ADP is any indication, employment growth will come in a little less than expected. Also, the ISM non-manufacturing employment index dropped to 51.6 percent in January, and the ISM manufacturing employment index fell to 54.1 percent. Both of those suggest a weak(ish) rate of employment growth in January.

Separately, TrimTabs Investment Research estimates that the U.S. economy will create between 190,000 and 220,000 jobs in January. The company’s estimates are derived from its analysis of income tax deposits to the U.S. Treasury from the paychecks of the U.S. workers subject to withholding. But at least one organization is still optimistic about job growth: Gallup’s U.S. Job Creation Index coming in at 28 for the month of January, just up from 27 in December, and not too far off its seven-year high last September, which was 30. (For the sake of comparison, in April 2009 the Job Creation Index was in a trough at minus 5.) The steepest gains in Gallup’s index came during the first half of 2014, but the last half wasn’t too shabby either.

Overall, the suspicion among economists, pundits and other observers is that January will be relatively weak in terms of hiring, especially when compared to some of the bang-up months in the fall. But not too weak. After all, 2014 turned out to be the strongest year since before the recession for employment, and if this year’s only somewhat as good, it’ll still be a strong year for job growth.