ADP Employment: Slower Hiring in October
November 4, 2020
Bottom Line: ADP reported slower than expected job growth in Ocotber as hiring slowed in the services sector. Manufacturing and construction jobs also saw much slower gains. 5+ months into the recovery from the shutdowns for the novel coronavirus businesses, especially in the services sector, faced uncertainty around a resurgence in the virus and how consumer behavior will evolve as colder weather made activities like outdoor dining less comfortable. The last three months saw job gains average 500k per month, well below the 6-month pace of 1.6 million, showing how quick the re-hiring was and just how much it has slowed with total jobs still below pre-pandemic level. This report suggests the potential for a downside miss of the consensus of 600k for the government nonfarm payroll report due Friday. ADP National Employment ROSE by 365k in October, compared with the consensus estimate for a gain of 643k. Meanwhile, the revisions to the prior 3 months added an additional 5k to the previous estimate. Over the past 12 months, private payrolls have decreased by an average of -782k per month, lifting employment to 7.3% BELOW its year-ago level. Jobs in Goods-Producing Industries ROSE by 17k jobs but Manufacturing gained 7k workers. Moreover, Construction gained 7k jobs. Service-Producing Industries ROSE by 348k jobs with Professional/Business Services hiring 61k workers, Trade/Transport/Utilities adding 53k, and Financial Activities increasing by 6k workers. Small Firms hired 114k workers, Medium-Sized Firms grew by 135k employees while Large Firms added 116k positions.
Article by Contingent Macro Advisors