Today's weak GDP numbers may be cushioned by respectable employment growth, at least if numbers by the ADP National Employment Report prove to be an accurate estimate of government figures.
"Employment looks like it grew in January," says Joel Prakken, chairman of Macroeconomic Advisers LLC. And employment growth may help keep consumption on track, despite declining housing prices and a jittery stock market, at least for the month.
"Every month jobs hold consumption steady is a month we're closer to the end of housing contraction, which is when the GDP pall will lift," Prakken says.
Nonfarm private employment grew 130,000 from December 2007 to January 2008, according to the report. Employment was spurred by service-sector growth, which grew by 141,000. Manufacturing employment flattened after 18 months of declines, and employment in the goods-producing sector fell 11,000.
The real estate decline again weighed on the construction and financial services sectors. Construction employment, in its 14th straight month of decline, fell by 13,000. Since the high in August 2006, construction jobs have fallen by 215,000. Employment in financial activities, which had showed strong growth during the real estate boom, increased only 1,000.
But these numbers should be viewed with caution: ADPs numbers have been rosier than the Bureau of Labor Statistics establishment survey. From July to December, the BLS has estimated that nonfarm private employment has grown at an average of 50,200 a month, while ADP estimated average growth at over 83,000 a month.
Prakken says that there can be discrepancies because of different sample sizes and processing methods. But, he says, these numbers are the "single best indicator of what the employment number is going to be."
The ADP National Employment report measures nonfarm private employment using payroll data from about 392,000 of ADP's U.S. clients, who work in all 19 major North American Industrial Classification private industrial sectors.
The BLS releases employment numbers on the first Friday of each month.