This morning’s positive ADP jobs report confirms the recent run of favorable economic readings and will add to optimism about Friday’s government jobs report. Also on tap for release later this afternoon is minutes of the Fed’s last meeting, where it made the Taper decision. Economic data in the run up to and since the Fed announcement has broadly been confirmatory of the Taper call.
The ADP report came in better than expected, with the December private-sector jobs tally at 238K tally and upward revision to the November number. The gains were broad-based, with small businesses (employers having less than 50 employees) adding 108K jobs in December. Medium-sized businesses (less than 500 employees) added +59K jobs, while large businesses (1000+ employees) added +71K jobs during the month.
The goods-producing sectors added +69K jobs in December, with Construction and Manufacturing adding 48K and 19K jobs, respectively. The construction gains appear to be the biggest that we have seen in years. The service sector added 170K in December, modestly down from the upwardly revised 182K tally in November.
Today’s ADP report builds on the momentum from earlier economic data that is prompting upward revisions to Q4 GDP estimates. The recent run of favorable economic data has been prompting positive revisions to GDP growth estimates for the December quarter, which has moved up from close to +1% at the start of the quarter to almost +3% at present.
We will get the first read on Q4 GDP in a couple of weeks, but a growth pace in the +3% vicinity will have pushed second half 2013 GDP to a pace more than double the first half’s rate. The consensus view is of this second-half momentum carrying into 2014 and generating sustainable growth in excess of +3%.
On the earnings front, Constellation Brands (STZ) came out with better-than-expected results and raised guidance. We also got better-than-expected results on the top and bottom lines from Monsanto (MON) this morning and Micron Technology (MU) after the close on Tuesday. We will get results from Bed, Bath & Beyond (BBBY) after the close today.
