ADP Sees 217,000 Payroll Rise, But Planned Layoffs Jump

The private sector added 217,000 jobs in January, pointing to an accelerated improvement in the employment picture, according to the ADP National Employment Report.

Out of work man
Out of work man

For several months running, ADP's numbers have sharply overstated actual nonfarms payroll improvements as calculated by the government. Friday's report is expected to show the economy created about 200,000 jobs in February.

The most recent private employment numbers, as calculated by ADP and Marcoeconomic Advisors, continue the trend of recent months showing improvements.

"Three months in a row with a data base this large and this broad with these kinds of increases is signaling to me that employment is starting to pick up," Joel Prakken, chairman of Macroeconomic Advisors, said in a CNBC interview.

But the ADP numbers have been a dubious indicator.

Last month's report actually was revised up to 189,000 from 187,000, but the Labor Department's report showed the economy created just 36,000.

Stock market traders seemed skeptical. Futures had been positive prior to the data release but turned negative quickly after.

Planned job cuts rose sharply in February compared with January, with most of the layoffs coming from the government and non-profit sectors, according to figures from outplacement company Challenger, Gray & Christmas out Wednesday.

Companies expected to lay off 50,702 workers last month, up 32 percent from the month before and up 20 percent than layoffs planned in February 2010.

That was the highest level of planned cuts since March 2010.

Planned layoffs in the government and private sectors soared 154 percent from January and 196 percent from the year-ago period. The US Postal Service cut 5,600 jobs in recent months, Challenger, Gray & Christmas said.

"“It is too soon to say whether the increases in January and now February represent a trend," CEO John Challenger said in a statement." Certainly the specter of rising gas prices could impact employers’ staffing decisions over the next six months."

"More job cuts at the federal level are expected in the months ahead as pressure mounts to cut costs and rein in the soaring national deficit," Challenger added. "Of course, while most would argue that the deficit must be addressed, it must be acknowledged that sending tens of thousands of government workers to the unemployment line and possibly furloughing thousands more will have negative consequences for the economy in the form of reduced consumer spending and increased outlays for jobless benefits."