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ADP Employment:  Miss With Negative Revisions

May 30, 2018

Bottom Line: ADP reported lower than expected job gains in May and revised prior month gains sharply lower. The 3-month average now stands at 180k, sharply lower than last month's 224k average. While not yet a turn in trend and still within the range of average gains seen over the last several years, there is now a loss in momentum. Slower job gains have been seen in trade, transport and utilities, including a surprise decline of 23k jobs in May, drove the miss and bears watching for signs of confirmation in Friday's non-farm payroll report, expected to show a gain of 190k. This report would suggest a modest downside risk to that consensus.

ADP National Employment ROSE by 178k in May, compared with the consensus estimate for a gain of 190k. Meanwhile, the revisions to the prior 3 months subtracted an additional 71k to the previous estimate.

Over the past 12 months, private payrolls have increased by an average of 187k per month, lifting employment to 1.8% ABOVE its year ago level.

Jobs in Goods-Producing Industries ROSE by 64k jobs as Manufacturing gained 14k workers. Moreover, Construction gained 39k jobs.

Meanwhile, Service-Producing Industries ROSE by 114k jobs with Professional/Business Services hiring 61k workers, Trade/Transport/Utilities subtracting -23k, and Financial Activities increasing by 2k workers.

Small Firms hired 38k workers, Medium-Sized Firms grew by 84k employees while Large Firms added 56k positions.

Article by Contingent Macro Advisors