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By Jason Stipp | 11-03-2010 05:06 PM

Jobs Report May Surprise on the Upside

With holiday hiring kicking into gear and most census workers already off the rolls, job growth in Friday's report could outpace expectations, say Morningstar's Bob Johnson and Vishnu Lekraj.

Jason Stipp: I'm Jason Stipp for Morningstar. Now that the midterm elections are mostly in the rearview mirror and the Fed has spoken, we are turning our attention to the Friday employment report.

Here with me to offer their take on the prospective numbers are Morningstar's Bob Johnson, director of economic analysis, and Vishnu Lekraj, who covers the employment sector for Morningstar.

Thanks for joining me, guys.

Vishnu Lekraj: Thanks for having us.

Bob Johnson: Nice to be here.

Stipp: So, the first question for you, Bob, we got the ADP numbers on Wednesday. They showed for October 43,000 private sector jobs added. They also revised the loss that they had seen in the month before from 39,000 to 2,000 jobs lost. This seems like the continuation of a relatively, mostly positive trend, if a sluggish trend. What is your take on the ADP numbers?

Johnson: I think ADP has tended for the last five or six months to underestimate rather consistently the amount of jobs that grow in the private sector. And I think this may be just another one of those, and we're really surprised to see how big a jump in revision there was in last month's number. And this will be one of the first really positive numbers we've seen in a little while out of the ADP survey. And to put it in perspective, I think the average for the year is around 34,000 jobs grown in a range of a minus number to as high as 65,000. So, it's a relatively positive number from a group that's been very negative.

Stipp: Vishnu, ADP reported that they saw some difference between the services and the manufacturing side. What's your take on how they're looking at those numbers and how we saw that division between the services sector adding jobs and what they reported as continued losses in manufacturing side?

Lekraj: They have continued to report manufacturing losses throughout the whole year. And I think Bob made a good point previously when we were talking about this before the video being shot, that they have always said the manufacturing was letting people go, but the BLS is reporting positive numbers for a while there.

When you take a look at the numbers and you break them apart, the service sector really drove the growth this time around. And in particular, the small- and medium-sized businesses drove growth, which is a very good sign because those type of businesses tend to lead us out in a recovery, and we need those businesses to hire more in order for us to sustain some growth in the employment market.

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