Huge jobs gain in December raises eyebrows

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A report on Wednesday from ADP showed that December job gains in the U.S. increased by 297,000 jobs. To put it in perspective, the estimate by most economists was for a gain of about 140,000. That means the actual reported gain was more than double the expectations. Such a big difference is almost unheard of.

Everyone was very surprised by these results. No one expected the economy in the U.S. to add anywhere near as many jobs as it did. However, if you look at the stock market in the U.S., it only went up a little (less than 1%). The reason? These aren’t the official numbers, which will be released this Friday, just a report by ADP. This doesn’t answer the question though. The answer is that economists and investors simply don’t believe these numbers. They seem too good to be true. ADP has made mistakes in reporting in the past so people think there is a better chance that the numbers are wrong than the actual gains being so much more than expectations.

Although economists don’t trust these numbers right now, the report was enough to raise economists’ expectations on the actual job gains. If the numbers end up being correct or even close to Wednesday’s report, you will likely then see the stock market shoot up. It may also represent a turning point to the stubborn employment situation in the U.S. If however, the numbers end up being completely wrong and come out at around 140,000 or so then this report will have done some damage. It’s not good to raise economists’ hopes only to have them fall back down soon after. Friday’s jobs data will be interesting to watch.