Job Creation Highest Ever For ADP Report

Tom Keene on Bloomberg was like these are Big Big Huge! numbers. Funny with his raspy voice but ya gotta love the guy. He's great. Loves what he does and is great at it.

270 of the 297 were service related jobs, ie retail and call center jobs calling people who are late on their mortgage/cc Just velocity of money, not jobs that actually produce anything or export anything that brings in new $ to the US

Come back in April and lets see what it looks like before you declare "the war is over'

From Knight's Brian Yelvington:

ADP, the best (and really only) predictor of Friday’s monthly jobs data, printed at a very high 297K gain for December versus expectations of a 100K gain. We have noted before that “best” here is a pretty low bar and the ADP report should be considered in its own right, and not just a forward look at the official numbers. ADP overestimated November’s jobs data (by 43K), but underestimated the prior 6 months (average difference of 55K).

That being said, the 297K print is hard to argue with. 270K of the jobs were in the services sector, so this raises expectations for the ISM Non-Manufacturing number due out at 10AM. We will closely watch this number for confirmation of the ADP data, but there is historically not a huge basis to argue with the number. Even adjusting for holidays and noting the service bias, it is not out of line. Service jobs accounted for about 97% of ADP December job gains and 84% of all ADP prints over the past five years. A confirming ISM number at 10AM will significantly raise expectations and estimates for Friday.

Digs, you're right: steveF is spunky.

And the spunkster should note that the ADP report is very rarely close to the actual figure, and that people were hired for XMas, and that local and state government payrolls have been falling. Show me an official report with a net gain of 400,000 jobs, then I'd say we're making progress. 250,000 to 300,000 are needed each month just to keep up with population growth.

wow. ssi is coming in at highest growth in 4 years. beautiful. another slam dunk.

the last time the economy created 400,000 jobs in one month was in 2000. why not shoot for 500,000 while you're at it?

297k is a great number. lets not put a negative spin on everything. after what we have been through the last few years, i think this is a step in the right direction.

well said, ekartash...well said.

equities are clearly pricing in some positive near term growth. No doubt about it. The question remains how organic is this growth, how much was stimulus related, what happens when stimulus is reversed, what happens when 'chase for yield' game runs out, do commodities surge again causing demand destruction, etc..But after the move up in equities, it would be pretty bad if the numbers did not follow suit. Remember, equities are a constant discounting mechanism that look out as much as they can and that usually is only 4-6 months or so.

You guys might be missing the big picture, which is that if these numbers are real, and confidence is returning, then that might be bad news for NY real estate. If the economy really is getting stronger the Fed will be in a position of not just being able to withdraw stimulus faster, but possibly having to do so. That might be removing two of the props that kept NY real estate from falling the way it might have: a) the low rates, since to remove stimulus implies higher rates, and b) removing stimulus implies removing the props that kept up bank profits.

Yes yes, I know it is sort of perma-bearish talk that bad news is bad and good news is bad, and that might be the case here as well (I will admit that). But if NY didn't go down the way it might have and if the reasons were the actions (financial and monetary) to stimulate the economy, then removing those actions might allow NY to deflate further. Not to the point it would have had there been a crash, but certainly further.

I think it all depends on how this plays out in NY employment and salaries. If the rates and stimulus are retracted faster than any increase in the economy affects wages and jobs then we deflate. If the opposite, then we go higher.

Noah, I think it's all about establishing confidence. Once confidence has been embedded then the Fed can do whatever it needs to do with minimal impact.

Another problem I see (in my own #'s. I have direct exposure to many prices like freight, energy, commodities, retail sales, etc because of my job) is that we are hitting the types of headwinds we had in 2007 but even before we are getting any real growth. All the input prices I mentioned above are at or nearing their highs while sales at the retail end have not yet returned to those levels. The only substantial one that seems different right now that I can think of is natural gas.

Then again, given enough time an economy can acclimate to new normals (did I just use the Bill Gross phrase?). I am pretty sure the US car fleet now uses a fair amount less gas/mile than it did in '07 (remember, 3-5% would be a huge change in just 3 years).

but its also not a given that mortgage rates will spike. the rates were around 6% for most of the decade. and that was without any stimulus.

jabs are good anyway you slice it. banks are definitely hiring againg here in NYC. soon itll be the law firms

Few things:

Stevef - the thing about confidence, is that it can change on a dime. Generally, the time to buy is when confidence is low and the time to sell is when confidence is high. But this trader mentality, contrarian mentality, is useless when there is absurd levels of govt and fed intervention into the system. Which we have right now. We continue to be in unchartered waters and nobody really knows what will happen when all the support system is removed - will organic growth be strong enough to sustain more moves higher from wherever we are at that time

ekartash - When it comes to rates, we were spoiled big time with unnaturally low rates; artificially brought down by intervention. I guess one could argue that without the intervention we would have seem much deeper destruction and even lower rates, but who knows. All I know is the fed is doing everything they can to keep rates low. For consumers, there is something called recency effect that I believe plays a role. Let me explain. Buyers, the ones that are exposed to changing rates as affordability is affected, tend to look at most recent moves in rates and not the big picture. For example, 1 year ago rates were slightly higher than today. Yet today's rates are MUCH higher than only 2-3 months ago when they were at historic lows in the mid 4s. I have buyers worried that rates are now 60-75 bps higher and kicking and screaming that prices should come down more to reflect this higher move in rates. So even though rates are still very low and in fact, a bit lower than 1 yr ago, they are noticeably higher than 2-3 months ago and buyers are starting to notice the effect on their monthly nut.

If rates go to 6%, historically its still low, but that would be up from 4.5% and buyers may start to change their thinking in terms of bids.

These are BIG numbers.
Friday's job number is going to be a barn burner.

SteveF - again, with minimal impact on WHAT? The problem with economies the size of ours is that you can have "minimal impact" on the average, and over great swaths of the economy while other parts still experience more than "minimal" impact. It is all a matter of relative valuation.

The Fed doesn't care about Manhattan prime real estate. Not one whit. In fact, they probably don't care a whole lot about wages and employment on Wall Street except as it might be a secondary indicator of the health and profitability of the financial sector. What they care about is the health of the average as a whole.

i think its great

Ok, I'll bite. A barn burner? 500,000? 700,000? Because at this stage of the game 250,000 to 300,000 should have been normal but now it is a barn burner.

Further, if we start getting good numbers that are that much better (god willing) then it becomes more likely the governmental props on our economy will be removed. That is why markets can go down on good news.

it is great Christine. Imagine the stress a father/mother is under when the funds are running out and their is nothing coming in. God, what a helpless/hopeless feeling it must be.

http://www.cnbc.com/id/40926288

From the bullish CNBC...

That big positive surprise this morning from the ADP jobs report was nice while it lasted — which was all of about 30 seconds by market standards.

Unfortunately, a number of traders and economists aren't willing to take seriously the report that ADP and Macroeconomic Advisors put out suggesting the economy created 297,000 jobs over the past month.

A quick straw poll this morning showed a lot of disbelief in the ADP numbers, and the report did virtually nothing to move the stock market.

But don’t expect many major revisions for Friday’s Labor Department report, expected to show nonfarm job increases of 140,000 jobs and an unchanged unemployment rate of 9.7 percent.

It will all deflate when the Fed withdraws all the money in the economy. Take a look at stock, commodity prices since the announcement of QEII.

and fed only bought 1.5 bln in today's qe2 buyback...it's been running 6 or 7 bl per...caused a second wave of selling in the bond market---if they're fine tuning (reducing) qe2 to the tune of surprise blips in ADP, and we continue to get stronger econ numbers, all will not be well with stox and bonds... and goldbuggery will be acutely painful

erichooooooooooooo

The last time the stock market soared and crashed was February - May of last year, and it crashed with a thud, flash-crash included, and the rebound started when the Fed announced QEII.

The market is up 20%+ in 4 months. Why? Cheap margin, that's it. Lots of free cash that's not being invested in the economy, with a market that goes up with good news or bad. As the free money dries up, the margin disappears, and leads to a very sudden crash.

This is the problem with Milton Freidman's theory of how to reflate an economy: it doesn't. It just causes more bubbles. Gold - rising at the same time stocks are? It's an historic impossibility. Oil at $92 a barrel? The last time that happened was just before the 2008 crash.

Alas, WB - we're NOT getting stronger economic data. Remember Bush's tax rebate in 2008, right before the crash? It pushed the GDP up for exactly 1 quarter, then it fell again.

This will be painful when it happens - nothing goes up so fast in such a short time, except a 16-year-old watching porn.

Gold was the first bubble up - it may be the first bubble burst.

Again, and I hate to say this: I think RS is right about QEII, I think it's bad economic policy. RS thinks it's bad economic policy even though it is what monetarists espouse, I think it's bad policy because it causes bubbles. Just like the Greenspan bubble, only different.

If global demand truly has picked up, this could be a monster bull market.

"soon itll be the law firms"

Where the heck do you live? Law is one of the most saturated professions out there.

Although, law firms will be hiring... in INDIA

http://en.wikipedia.org/wiki/Legal_outsourcing

"Job Creation Highest Ever For ADP Report"

This is great news. Too bad the report neglects to say which country all those jobs are in.

"The private sector created an eye-popping 297,000 jobs from November to December, according a report from ADP that was the highest number the payroll firm has ever reported."

This is complete bull. Everyone knows that most of these jobs were temporary holiday jobs.

Jobs are being created, things are getting better, albeit slowly. It's just the money being pumped into the economy is not going to where it's supposed to go.

Take all the credit card offers I just got - because my credit score is 800+.

This is the same thing the Fed did in 2000; it didn't work then, it won't work now. Look at all the stock-market indicators; never have stochastics been above 50 for such an uninterruptedly period (since September 1). Very bad omen.

Don't you people get it? The jobs are all going overseas. And were not just talking about factory and call centers. Were talking white collar jobs like accountants and lawyers.

socialist , dont you get it..this is a real estate blog.unless ur a bull or bear...beat it!

How can you be a bull on the economy when unemployment is 16%? What are you people idiots? WHat does the unemployment have to be to be a bear? 25%?

and measuring job growth between November and December is retarded. Your counting temporary jobs that no longer exist. I can't take any study seriously that factors in such flawed data.

Its bull or bear on MYC metro are real estate. just stick to making maple syrup at ur place in vermont. thats your comparable advantage.

This thread has nothing to do with real estate. It's about jobs.

"comparative advantage," marco, not "comparable advantage."

Socialist is right - nothing changes with 9.8% reported unemployment, and if a bubble is created and bursts again, it will be just like 2000-2008: dot.com, housing. Stock markets don't rise 25% with 9.8% unemployment, and housing prices don't stabilize.

If I took out all of my credit card advance offers I could get at least $100,000 in UNSECURED loans at 4% interest. Sound dangerous?

Socialist, the unemployment rate it not 16% nor is it 9.8%, Steve. It's 22%

http://www.shadowstats.com/alternate_data/unemployment-charts

"The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994."

Sexy chart!

Real barn-burner...

Employers in the U.S. added fewer jobs than forecast in December and the unemployment rate dropped, partly reflecting a shrinking workforce, a sign the labor-market recovery will take time to develop.

Payrolls increased 103,000, compared with the median forecast of 150,000 in a Bloomberg News survey, Labor Department figures showed today in Washington. Employment the previous two months increased more than previously estimated. The jobless rate fell to 9.4 percent, the lowest level since May 2009.

Told you so. The stock market is a free money bubble, adding nothing to the real economy; once the free money dries up, so will the bubble.

Think of it this way: you're a bank, you get free money but don't want to commit for the long-term, so what do you do?

You lend it out to speculators at 4% on margin, no risk to you because the margin calls protect you from losses. That's why when the inevitable crash happens - as it will - a la the flash crash, it will be very fast. Just a matter of when it happens.

Free money? Sign me up.

stevejhx: Where you putting money these days? After being in cash for over two years I have put a toe or two back in the pond via some ETF's. When things turn I'll get out (at least do my best to minimize damage).I generally rely on Dan Sullivan to get me in or out.

I see a 20% correction from this level. I might be wrong, G-d knows this run-up surprised me & all the industry players I know.

But for all I know the Dow could go up to 20,000, and housing prices could grow forever at 20% a year.

and monkeys could fly out of my azzzzz. (An ode to w67th)

Over the summer I would ask different finance people I was working with "What the hell is driving this market up?" This included people from GS etc... Each one had the same answer" Got me, we look at each other at work and ask the same question." This did not instill much confidence in me...lol.

Now though it seems that we can all agree, at least while the fed has the spigot open and intends to keep it open, that is what is fueling this, the old saying of "Don't fight the fed" comes to mind. I have now jumped on that bandwagon... I wonder if fed policy is fueling all the other "positive" numbers out there or are things improving organically with some assistance?

keith, your timing might be off. there's been some talk that the fed has neither the will nor the political backing to begin QE3 (at least right when QE2 is scheduled to end, june i believe).

AR: Wouldn't be the first time :) Have that toe in the water for about 3 weeks, i'm up and watching carefully!

> I see a 20% correction from this level.

Remember, Steve called the same correction at the last 5 levels. ;-)

> wow. ssi is coming in at highest growth in 4 years. beautiful. another slam dunk.

Told you you should have been buying stocks, not Manhattan RE....

steveF "Any unemployed out there keep pushing. It's just a matter of time."

http://cr4re.com/charts/charts.html#category=Employment&chart=PercentJobLossesDec2010.jpg

Looks like 20-24 months at best before pre-recession employment levels. I wonder how their job skills are going to be after four years out of work....

"The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994."

They were defined out of existence LONG before that. U-6 is the best measure of overall unemployment, and can be consistently applied in order to compare figures going back to 1940. It was made more accurate in 1994, but 22% is peak of the Great Depression levels, and there is no way that is where we are now.