Employment Still on the Rise?

ADP reports an increase in private-sector employment; Moody's expects improvement for CMBS in 2011; and construction is at a decade-long low.

It’s the time of the month again when ADP issues its monthly jobs numbers ahead of the U.S. Department of Labor, which will be at the end this week. So ADP reported on Wednesday that private-sector employment increased by 187,000 from December to January on a seasonally adjusted basis.

Of course, ADP has been known to be at odds with Labor’s reckonings more than a few times. In fact, for some months running now, ADP has released higher employment numbers than Labor, though sometimes ADP revises them downward later (as was the case with the November to December report, revised down 50,000 to 247,000 jobs added). Still, the firm points out that “the recent pattern of rising employment gains since the middle of last year appears to be intact, as the average gain over December and January (217,000) is well above the average gain over the prior six months (52,000).”

Separately, Challenger Gray & Christmas Inc., reported on Wednesday that U.S. companies planned to cut only about 38,500 jobs last month, down 20 percent from December and the lowest number of planned layoffs since the summer of 2000. Still, the company noted that there could be an uptick in layoffs this year as states and other governments grapple with their budget problems–and one time-honored way to do that is by firing workers.

CMBS to expand in 2011

Moody’s Investor Service in a report on Wednesday said that it expects higher new issuance volume and greater ratings stability for outstanding commercial mortgage backed securities in 2011, as the U.S. commercial property markets crawl back to some semblance of normalcy. “Trifurcated” is the term that Moody’s used to describe the new CRE reality: prices for larger trophy assets rising; prices for distressed assets declining sharply; and prices for smaller but healthy properties remaining essentially flat.

The factors driving resurgent CMBS include, according to Moody’s, increasing or stabilizing property values (at least for the non-distressed properties among them); higher transaction volumes; and greater liquidity for commercial real estate in 2011.

All together, Moody”s predicts $37 billion of U.S. CMBS issuance for 2011. “The combination of borrowers seeking low interest rates and investors seeking higher yield led to a three-fold increase in issuance in 2010 over 2009, with deal size and deal diversity also increasing,” notes Moody”s Managing Director Nick Levidy in a statement. “Based on what is already in the pipeline, we anticipate those trends to continue and accelerate in 2011.”

Construction in the dumps even more

According to the Census Bureau this week, U.S. construction spending was down in December by 2.5 percent to an annualized rate of $787.9 billion, the lowest level since the summer of 2001. Private spending on construction was down 2.2 percent, while public expenditures for construction dropped 2.8 percent. The largest drop by far was in new residential construction, down 4.4 percent.

Wall Street had a lackluster day to follow its bouncy mood, with the Dow Jones Industrial Average eking out a gain of 1.81 points, or 0.02 percent. The S&P 500 lost 0.27 percent and the Nasdaq was down 0.06 percent.