Every monthly employment report is crucial these days, but Friday’s update may be the first among equals. When we last checked in with the nation’s payrolls report, there was a collective sigh of relief that private-sector job creation avoided a descent into darkness in August. A repeat performance is essential if there’s any hope for sidestepping a new recession.

Some argue that an economy that’s merely bumbling along is at higher risk stalling. But one could just as easily argue that when you’re already on your knees, you’re closer to the ground and so the chances of falling are diminished, or that the fall (should it come) will be mild. For those who agree, the diminished state of housing is a key factor. Residential real estate isn’t helping the forces of recovery, but no longer is it a threat to dragging us over the cliff.
One hint of things to come on Friday suggests that there’s still forward momentum in the labor market, but just barely. Job creation is still sluggish among small companies, according to the latest update from the Intuit Small Business Employment Index. The latest readings imply a sluggish annual growth rate of 1.7% for October. Or is that a rounding error?
Later today comes word of the ADP Employment Report for October. The consensus forecast via Briefing.com calls for a modest rise of 100,000 new jobs, or slightly higher than last 91,000 gain, which is roughly what economists overall are expecting for Friday’s employment update from the government.
If that forecast holds up, it’s just enough to keep hope alive that a new recession can be avoided. But that’s about as far as it goes. There’s not much confidence that the economy will break free of its sluggish state any time soon. Radical optimists have been reduced to thinking the fourth quarter won’t suffer the start of a new recession. On Friday we’ll have a better reading on whether such notions are the stuff of dreams.
Update: Private-sector employment rose 110,000 last month vs. September, according to today’s ADP Employment Report for October. That’s roughly in line with expectations, although it represents a small dip from September’s upwardly revised 116,000 gain. Nonetheless, here’s one more data point for thinking that Friday’s jobs report from the Labor Department will deliver more of the same: a modest dose of job creation. One dark spot, however, is that today’s ADP report shows that all of last month’s rise in private sector employment came from the services sector. Manufacturing employment slipped last month, as it did in September.