Jobs Growth Likely To Continue At Mediocre Growth Pace

Mediocre ADP Job Growth Figure an Omen for Mediocre Jobs Report on Friday

Ho-hum.  In the month of March (the accounting month anyway, which ended on Thursday), payroll processing company ADP says it saw a (net) creation of 200,000 new payrolls, right in line with estimates and just a bit below February's job growth figure of 214,000. That number is also right in line with what's become a long-term average. It's not a bad figure, per se, but we've yet to see jaw-droppingly high job-growth numbers that would suggest the economy was robust. Some would argue that we need to see about 400,0000 new jobs created per month in order to really ignite economic growth.

Either way, to the extent the ADP report is an omen of the comparable report from the Department of Labor -- due on Friday -- investors don't have anything too exciting to look forward to there. As of the latest look, economists were calling for 195,000 new jobs on that front, which shouldn't be enough to move the unemployment rate needle away from its current reading of 4.9%.

It's possible for job-growth rates to simply grind along at roughly 200,000 per month and still drive some level of economic expansion. Indeed, with the unemployment rate of 4.9%, joblessness is getting close to peak.... well, trough unemployment of 4.4% seen in early 2007; there just may not be a great number of new jobs to add now, after years of slow but steady payroll growth. 

At this late stage of the economic growth cycle though, most economists agree we need to see at least a little more job growth and higher-paying job-growth -- and soon -- to sidestep a cyclical end to what little economic growth is currently being mustered. Underscoring that concern is that 191,000 of the 200,000 new jobs added in March were service jobs, which tend to be lower-paying and somewhat transitory.