KEY DATA: ADP: 215,000; Small Businesses: 102,000/Trade Deficit: $2.3 billion narrower
IN A NUTSHELL: "The stars seem to be aligning for a lot better growth as firms are hiring and exports are surging."
WHAT IT MEANS: I have said many times that the government is the major impediment to growth. When people in Washington shut up about divisive issues such as debt default and government shut downs, businesses go about their business and households spend money. That seems to be happening. As is usual, ADP gave its early snapshot of what private sector job gains could look like in Friday's employment report, and the number was an eye-opener. It looks like firms are back in the hiring business. ADP indicated that the gains were spread across companies of all sizes and in all industries. Small businesses, which had slowed up bringing on new workers have reversed course, a key sign that the economy is getting better. Construction, manufacturing, trade, services and even financial companies added people to their payrolls.
A second positive sign for the economy was the sharp narrowing in the trade deficit in October. Exports of everything but vehicles were up. That points to improving world growth, which we really need if exports are to continue to expand. On the import side, U.S. purchases of capital goods and vehicles fell. Given the robust November vehicle sales pace of about 16.4 million units, the highest in nearly seven years, I would guess that lots will have to be restocked soon. Adjusting for inflation, the deficit is down from the third quarter average so there is hope that trade could add to growth this quarter.