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By Jason Stipp | 11-01-2012 11:00 AM

October's Job Report Could Surprise on the Upside

October job gains could come in modestly higher than consensus given a positive seasonal adjustment factor, recent economic trends, and possible tailwinds from construction and retail.

Jason Stipp: I'm Jason Stipp for Morningstar. We got ADP payroll report for October on Thursday. An overhauled methodology on that report showed 158,000 private sector jobs were added to the economy last month.

What does that say about the potential for job growth in the government employment report due on Friday? Here with me to offer their insights is Morningstar's Bob Johnson, our director of economic analysis, and Vishnu Lekraj, who is an equity analyst who covers the employment sector.

Thanks for joining me, guys.

Vishnu Lekraj: Thank you.

Bob Johnson: Great to be here.

Stipp: We did get a newfangled ADP report, Vishnu. It showed hundred 158,000 jobs were added. They are using a new methodology here. Before we dig into the methodology, what do you think of the overall numbers? How did it break down, and do you think that was a good number, 158,000?

Lekraj: Yes, it's pretty positive, but again you to be cautious. You have to take it with grain of salt. It's just a whole different report. They broke it apart more granularly, but in addition to that, some of the categories moved around, and moved around hugely.

So, overall, ADP states we added about 158,000 jobs to the private sector last month. Driving a good portion of that were larger businesses. This runs contrary to what we've seen over the past several years with the report, where these larger businesses were some of the laggards in terms of adding jobs. This time around, it was one of the leaders.

So, overall, it's a little different report, but it's pretty positive. You saw construction add some good jobs. You saw some good growth out of some other service sectors, but overall, again, you have to take it with a grain of salt.

Stipp: Bob, how many ADP reports on this new methodology would you need to see before you could really feel confident about the trend in these numbers?

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