Economic Snapshot: Full employment by 2016?

Let’s kick off 2015’s economic coverage with some good news, shall we?

To start, we’ll look at private sector employment. According to Mark Zandi, chief economist of Moody’s Analytics, at the current pace of job growth, the economy will be back to full employment by this time next year.

Expansion in the manufacturing and non-manufacturing indexes continued in December, though expansion was at a slower rate than the previous month. And in both indexes, employment growth is gaining momentum.

ADP employment report 

Private sector employment increased by 241,000 jobs in December, up from the upwardly revised 227,000 jobs in November and from 191,000 jobs added in December 2013. This is the fourth consecutive month of job gains above 200,000 and well above the consensus forecast for 223,000 private sector jobs.

Small businesses added the highest number of jobs in December, increasing by 106,000. Medium businesses were next at 70,000 followed closely behind by large businesses, which added 66,000 jobs.

Goods-producing employment rose by 46,000 jobs, up from 40,000 in November. Construction also saw employment gains, adding 23,000 jobs versus 20,000 in the previous month. However, the largest increase in December came from manufacturing, which added 26,000 jobs in comparison to 16,000 in November. This was the second highest total of jobs added in 2014 for the sector.

Service-providing employment added 194,000 jobs in December, up from 187,000 in November. Professional/business services contributed 69,000 jobs, a huge increase compared to 37,000 jobs added in November. Jobs in trade/transportation/utilities grew by 44,000, down from 54,000 jobs in the previous month. Financial activities reported its largest monthly job gains for 2014 in December, adding 16,000 jobs compared to November’s 5,000. 

ISM manufacturing

The ISM manufacturing index decreased from 58.7 percent in November to 55.5 percent in December. Economic activity expanded for the 19th consecutive month and the overall economy grew for the 67th consecutive month.

New orders fell 8.7 percentage points to 57.3 in December, while production came in at 5.6 percentage points below last month at 58.8 percent. The prices index was down 6.0 percentage points from November, now reading at 38.5.

However, employment saw a 1.9 percent increase this month, now registering at 56.8 percent.

Of the 18 manufacturing industries, 11 reported growth in December. Six industries reported contraction and one was unchanged.

ISM non-manufacturing

The ISM non-manufacturing index registered at 56.2 percent in December, 3.1 percentage points lower than 59.3 in November. However, this marks the 59th consecutive month growth in economic activity in this sector.

The business activity index decreased 7.2 percentage points to 57.2, which reflects 65 months of consecutive growth for the index. New orders also dropped, registering 2.5 percentage points lower at 58.9. The prices index fell 4.9 percentage points to 49.5, indicating price contraction in December.

Employment dipped slightly by 0.7 percentage points to 56.0 but marked the 10th consecutive month of growth.

Of the 17 industries included in the non-manufacturing sector, 12 reported growth, with Retail Trade leading the way. Five industries reported contraction, including Arts, Entertainment & Recreation.