American employment last peaked in January 2008 at 115.972 million total private-sector nonfarm payroll jobs, according to employment services giant Automatic Data Processing (NASDAQ:ADP). It's been over six years since that growth stopped and the economy plunged into its worst recession in decades, but the latest ADP National Employment Report finally showed employment figures that push past that pre-crash peak: Thanks to an addition of 191,000 new jobs in March, America's total private-sector nonfarm payroll jobs now total 116.068 million jobs. This the first time that the jobs figure has risen above 116 million in over a decade of ADP's updates.
However, major indices continue their recent trend of ignoring the ADP's update. In the last two months, the Dow Jones Industrial Average (DJINDICES:^DJI) barely registered the new jobs figures; as it's hovering near breakeven in early afternoon, it seems likely the Dow will again pay little attention to this update, new record or not. Despite this indifference, the latest figures are good news for market watchers who may fear a downturn -- ADP's monthly updates continue to show slow but steady employment growth without any significant dip toward the steep losses endured in 2008 and 2009:
Some Dow components are reacting far more positively to the update, particularly construction-centered Home Depot (NYSE:HD) and Caterpillar (NYSE:CAT), which were two of the only three stocks to rise above a 1% gain as of early afternoon. You can see why in this indexed chart of job gains and losses in each major sector ADP tracks, as construction-related employment continues the surge that began over the last year after construction jobs bottomed out in 2010:
Of course, there are still far fewer people working in construction jobs today than there were before the crash. Employment in that sector topped out at 7.7 million people in January 2007 before serving as a leading indicator of the oncoming crash; today there are only 6 million people employed in construction, 22% fewer workers than there were seven years ago. But there are 10% more workers (roughly 500,000 more people in nominal terms) in the construction sector today than there were in 2010. The construction sector added 20,000 new jobs in March, which is very impressive in light of the fact that sectors with much more than double construction's total employment -- trade/transportation/utilities and professional or business services -- added only about twice as many new jobs.
In fact, construction is again one of the hottest sectors in the country, adding over 200,000 new jobs in the past year, compared to 500,000 in trade/transportation/utilities and 530,000 in professional and business services. Keep in mind that these diversified sectors employ 26.2 million and 18.9 million people, respectively, compared to the 6 million employed in construction jobs:
The uptick in jobs this month is credited to the thawing of labor conditions after a brutal winter -- Moody's chief economist Mark Zandi, who works with ADP to compile the monthly jobs report, was quoted in ADP's press release as saying:
The job market is coming out from its deep winter slumber. Job gains are consistent with the pace prior to the brutal winter. The gains are broad based across industries and business size classes. Even better numbers are likely in coming months as the weather warms.
Looking forward, investors and economists now eagerly (or perhaps cautiously) await the release Friday of the U.S. Bureau of Labor Statistics' official monthly employment figures. ADP recently updated its methodology to more closely track the BLS jobs figures, and based on this month's uptick, we can probably expect the BLS to report roughly a national gain of 200,000 new jobs, with a margin of error of perhaps 25,000 in either direction (the average deviation between ADP and BLS numbers has been approximately 50,000 jobs over the past three years).
This isn't to say that the American economy has nothing but smooth sailing ahead, but surpassing a milestone set over six years ago is an important indicator that it's probably not time to write off the American growth story just yet.