January ADP Employment, ISM Manufacturing, December Construction

   Labor Data Shows Active Small Businesses Hiring

  • The ADP Employment Report for January showed an overall increase of 170,000 private sector jobs.
  • The January ISM Manufacturing Survey’s Purchasing Managers’ Index ticked up to 54.1 percent.
  • Construction Spending for December increased by 1.5 percent; led by gains in private residential.

The ADP payroll survey for January showed a middling gain of 170,000 private-sector jobs for the month; not a bad number but also not a great one. Small businesses of less than 50 employees did the yeoman’s work adding 95,000 jobs. Medium sized companies (50-499 employees) added 72,000. Large companies collectively took the month off, adding only 3,000 employees on net. The January reported gain of 170,000 follows on the heels of a strong, but downwardly revised, 292,000 job gain in December. Manufacturing companies added 10,000 jobs in January according to ADP. The January ADP data are just a little weaker than expected but still consistent with an overall improving trend in labor market data. Today’s ADP report would be consistent with a reported increase of about 150,000 jobs in the official BLS numbers for January, which will be released this Friday.

The ISM manufacturing survey for January showed an increase in overall manufacturing activity at the start of 2012 as the manufacturing PMI increased to 54.1 percent. A reading above 50 indicates an expanding manufacturing sector. A boost came from strong pricing, a sizeable backlog of orders and inventory gains. Fourth quarter 2011 real GDP growth of 2.8 percent was boosted by strong inventory accumulation and now we see that trend is continuing into early 2012Q1. Gains were not especially broad based in January. Of the 18 reporting industries, nine reported growth in January including apparel, petroleum, machinery and computers. Seven industries reported contraction, including plastics and rubber, furniture, wood products and chemicals. Anecdotal comments were generally favorable. Construction spending for the month of December increased by 1.5 percent as spending on private residential projects gained 2.1 percent.  This is consistent with the moderately improving housing starts data at year-end 2011. Private nonresidential also showed a strong finish to 2011, gaining 3.3 percent with help from the manufacturing sector. Total public construction increased by 0.5 percent for the month.

Market Reaction: U.S. stock markets opened with gains. Treasury yields are up.  WTI crude is up to $99.07/barrel.  The dollar is down against the euro and the yen.

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