Economists, Markets, Doubt ADP’s 297,000 New Jobs Estimate

This morning’s incredibly bullish jobs report from ADP is being greeted with outright skepticism by investors and economists, who think the 297,000 new private sector jobs in December is overblown.

“ADP has had some spectacular misses and I’m a little bit hesitant at this point to fully buy into the data,” Joe LaVorgna, chief U.S. economist at Deutsche Bank in New York, told CNBC.

The reaction — the stock markets reacted not all —  is certainly understandable; the jobs number is the highest ADP and its partner, Macroeconomic Advisers, have reported since the National Employment Report was launched in 2001. The average estimate of economists surveyed by Bloomberg in advance of the report’s release was 100,000. The highest prediction among its surveyed economists was 150,000.

Bloomberg’s survey also predicts that Friday’s monthly jobs report from the U.S. Bureau of Labor Statistics will show 150,000 new jobs in December and a decline in the unemployment rate to 9.7 percent from November’s 9.8 percent.

Ken Goldstein, an economist with The Conference Board who supports the 150,000 jobs estimate, told CNBC, “To think that we got 300,000 jobs will be the surprise. It will be no surprise if once more ADP got it wrong.”

The ADP estimate is skewed, economists say, because year-end tax considerations distort payroll records. ADP processes payrolls for some 500,000 companies accounting for 23 million employees. It is from these records that Macroeconomic Advisers develops the job numbers.

ADP also slightly revised its November report downward; 92,000 new private sector jobs, rather than the 93,000 initially reported.

Despite discounting the magnitude of the job creation, economists were fairly unanimous in predicting continued — and sizeable — job growth.

“The headwinds for the recovery are fading,” Jim O’Sullivan, global chief economist at MF Global Ltd. in New York, told Bloomberg. The Conference Board’s Goldstein agreed: “Clearly there has been a change in the overall economic environment.”

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Meanwhile, The Conference Board issued its monthly jobs supply report this morning, which said the number of online job postings declined slightly in December. There were 4,447,800 different jobs posted online during the month, a drop of 9,400 from November.

“The year 2010 ended with a continuation of the lackluster labor demand we have seen throughout the last half of this year,” said June Shelp, Conference Board vice president. The strongest job demand was in the first quarter of the year, but the rest of the year failed to show that employers were significantly ramping up hiring across the economy … after a promising start, 2010 ended with the overall job market relatively flat.”

Thursday, Monster releases its monthly employment index and then Friday, at 8:30 a.m. Eastern, the closely watched BLS jobs numbers are released.