Gleaning economic clues from jobs reports

There’s a “growth scare” on Wall Street, and a trio of job reports this week could shed light on whether economic worries are a scare or something worse.

In a consumer-driven economy — roughly 70% of economic activity is driven by U.S. consumers — jobs are a key to feelings of financial security. And the U.S. employment picture has been a bright spot for the American economy at a time when manufacturing has entered recession.

That’s why Wednesday’s report from payroll processor ADP — which will show how many jobs were created by private employers in January — Thursday’s weekly reading on how many people lined up for unemployment benefits for the first time, and the key government January jobs report Friday will be closely watched on Wall Street.

Investors got some good news early Wednesday, when the January ADP report showed 205,000 new jobs were created, topping the estimate of 190,000 to 195,000 new jobs.

Initial jobless claims are expected to come in at 275,000 on Thursday, and on Friday the government sees the economy creating roughly 200,000 new jobs in January.

“Investors need to see more signs the economy is stabilizing or improving,” says David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management. “If Friday’s jobs report is a dud (fewer than 100,000 new jobs), this would foster increased worry that a worldwide economic slowdown will tip the U.S. economy (into recession). A strong result — over 200,000 — would be an endorsement of the view that the U.S. consumer is in good shape.”