Last week, we awarded the Wonky for most overrated economic statistic to the government's monthly jobs numbers, which are prone to considerable error and tend to get way more hype upon release than they deserve. However, an alternative metric -- the ADP employment figure -- is, if anything, underrated. Collected by the payroll processing firm ADP, the report has offered a more accurate first guess of the actual, final job numbers during the current economic crisis than has the Bureau of Labor Statistics' initial release for the month. ADP has since switched its methodology a bit, but it's definitely worth paying attention to.
The ADP figures for December came out Thursday morning and are rather encouraging. ADP estimates that we gained 215,000 jobs in December, far outpacing any recent months' gains, and it also revised its November number from 118,000 jobs added to 148,000. Considering that Hurricane Sandy likely had a significant effect on the November numbers, that's a very solid report -- and one that gives more hope for a speedier recovery than we've seen in a while.
Now, that's still not good in an absolute sense. According to the Hamilton Project's handy calculator, even if we kept up the 215,000 jobs-a-month pace, we wouldn't be back to the pre-crisis employment trend until 2020. And in the 1990s, monthly job growth averaged over 300,000 jobs added a month, which should be easier to match during a recovery than during normal times. But the latest ADP report could also suggest that the Federal Reserve's newly aggressive posture, combining monthly asset purchases with interest rates tied to the level of unemployment, is already working.
Here are a few more key stats from the report, courtesy of ADP: