01 February 2012 at 13:36 GMT
Another piece of good news about the US labour market has just been released by the private company, ADP. How can that be given the miss on expectations? Read on.
The January report shows a net increase in private sector employment of 170,000 against expectations of 182,000. While the number was far below the print from December (+292,000 revised from +325,000) we would like to draw attention to the fact that the December report was too optimistic due to the so-called purge effect (the methodology used by ADP means that the December number overstates actual job growth). Hence today's number is a much better reflection of the actual health of the labour market; that is, one of improvement - but at a slow rate.
The drivers of growth were small businesses (+95,000) and medium businesses (+72,000) while large companies only added 3,000. Looking at sector distribution most improvements came in the service sector (+152,000) while the goods-producing sector added 18,000.
The US labour market continues to improve, but as we have maintained all along we still expect 2012 to be another year of muddling through. Employment is bound to increase by 150,000-200,000 per month this year, better than last year (+137,000/month average), but still not enough for a robust recovery.
