As usual, the day before the official BLS Employment Situation Report comes out ADP has produced their own estimate of private sector dynamics and they’re saying the economy added 201,000 jobs in August.
The ADP report is a pretty good predictor of the BLS number, but there’s a lot of fuzziness. So there’s no guarantee that 200,000 from ADP means we’re going to get 200,000 from the BLS. But I start now with a baseline expectation that we’re going to get 150,000 jobs in any given month. Then data comes in and you revise your estimate. An ADP number at 200,000 means that we’ll probably beat 150,000. If I had my druthers and we were running a real monetary policy expansion, I think we could be adding jobs at 300,000 a month and really putting a big dent in the output gap. But with the policies we have in place the best we can really hope for is gains in the 150,000-200,000 range which is fast enough to reduce the unemployment rate but not so fast as to cause inflation.