Automatic Data Processing, a payroll processing company that releases its own employment monthly report a day before the U.S. Department of Labor releases its report, said today that nonfarm private employment nationwide grew by 201,000 for the month of August. Jobs in the construction field grew by 10,000, ADP's best reading since March.
Economists generally do not put too much weight on the company's monthly report, since it often diverges significantly from the federal report. But ADP’s is always looked at as a harbringer for what one might see in the latter report. Because of the good news in today’s report, some experts have revised their expectations for tomorrow’s federal report upward, from 120,000 new jobs to 125,000.
ADP measures private payrolls, naturally, since that is what it does. Often, changes in public payrolls drastically can skew the federal report from ADP’s findings. We saw that, with government rolls being cut over the past few years as states cut back due to lower tax revenues, those public sector losses brought down the total job increases in the Labor Department's report. But it’s possible that trend could upend itself, in light of the fact that local and state governments are beginning to hire more people again, at the fastest rate seen in four years.
In spite of the good news, however, the construction industry has an enormous hole to dig itself out of. As you can see on the chart below from ADP’s August report, the job losses in the construction field leading up to and following the 2008 financial crisis were devastating, and will take a considerable amount of time to get back.