One reason for the enthusiasm? Looks like the private sector hired 216,000 people in February, according to the latest monthly report from payroll processor ADP. That was roughly in line with forecasts.
But investors shouldn't get too excited. The big jobs number from the government comes out on Friday. And the ADP number has hardly proven to be a reliable predictor of how the Labor Department numbers will pan out.
I took a look at the past 12 months of ADP data and government data. In seven out of the past 12 months, the ADP report did accurately forecast whether the number of jobs the government said were added met or missed economists forecasts.
The ADP jobs gains for March 2011 topped estimates. So did the government payroll additions. The same thing happened in July, September, November and December. And in May and August, both the ADP and government numbers were lower than economists' forecasts.
But that's just an accuracy rate of 58% for my admittedly small sample size. In the other five months, ADP did not predict the magnitude of the jobs surprise. (Funny how there always is a surprise though. The economists never really nail the jobs numbers on the head. They call economics the dismal science but perhaps that adjective is really in reference to the forecasts.) So the odds of ADP foreshadowing whether the main jobs report will be a disappointment or cause for celebration is only slightly better than a coin flip.
That's why I keep urging people to not put that much stock in the ADP numbers. Over on Twitter, I've jokingly referred to ADP in the past year as the MySpace, USFL and Iowa Caucus of jobs reports to the Facebook, NFL and New Hampshire Primary that is the government jobs data. I now add a new one to that list. In the spirit of the college hoops madness that will soon descend across the land, ADP is the NIT of jobs reports to the Labor Department's NCAA Tournament.