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By Jason Stipp | 05-04-2011 12:20 PM

Job Growth Underwhelming, but Not Unusual

Although we don't expect Friday's labor report to knock our socks off, the recent growth trend has been in line with past recessions.

Jason Stipp: I'm Jason Stipp for Morningstar.

Ahead of the government employment report for April, we got ADP data on Wednesday that showed 179,000 private sector jobs added to the economy in April. That was a little bit less that economists were expecting.

Here with me to dig into the numbers and also offer their forecast for Friday is Morningstar's Vishnu Lekraj, he is an equity analyst covering the employment sector, and Bob Johnson, he is director of economic analysis.

Thanks for joining me, guys.

Bob Johnson: Great to be here.

Vishnu Lekraj: Thanks.

Stipp: Vishnu, 179,000 disappointed some market watchers a little bit on the ADP report. What do you think the growth we saw there?

Lekraj: I think it was pretty much in line what we've seen over the past several months. When you map that trend out over since November, we've added about 200,000 jobs into the private sector consistently. That's really good news. When you break that down on a business-size level, small businesses are consistently adding a large amount of jobs to this economy, and that is a sign of strength in my opinion.

Stipp: Bob, I just want to get a little bit of context here. So the "disappointment" on this number was about 20,000. Can you put that number in perspective. I mean given that we're dealing with numbers that aren't huge anyway, is 20,000 really a disappointment?

Johnson: It's a rounding error, and as we know the ADP numbers, the track record recently has not been so good. It's not been terribly predictive of what actually happens with the government report that comes out on Friday.

The way they count it, and look at individual paychecks versus the government who does different types of survey data, it usually produces data that is somewhat different.

Stipp: Vishnu, you had recently dug into some past recoveries, and the job growth that we had seen. Can you tell me a little bit about what you found and how we're comparing to coming out of past recessions?

Lekraj: I looked at recessions going all the way back to 1945, and I tried to look at the monthly job gains from the end of recession, 21 months after that, because we're about 21 months after the end of this last recession.

When I mapped the recession recoveries out, we're pretty much in line with average for this recovery. Now a lot of people are saying this is a jobless recovery. This recovery is pretty slow, very nascent. However, when you look at everything to the average and especially with the last two recessions, we're pretty much in line. 200,000 jobs to 300,000 jobs is usually what we're going to see on a month-to-month basis when we're in a recovery.

Now everyone's waiting for 400,000 jobs consistent number or a 500,000 jobs consistent number. That just not going to materialize, and you may see a blip here or there with that type of number, but for the most part, 200,000 to 300,000 is going be a good solid recovery.

Stipp: Bob, are you going to be okay, if you don't see 300,000, 400,000, 500,000 added jobs in one month?

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