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ADP Employment: Sharp Rebound But Watch Small Firms

August 1, 2018

Bottom Line: After missing expectations in May and June ADP employment rose sharply in July, more than expected. Education and healthcare sectors added jobs as professional and business services also saw a modest acceleration in job gains. Overall the trend rate of growth for ADP has rebounded modestly, holding just below 200k. While job growth at both large and medium firms remains in an uptrend, small firm hiring has been steadily slowing for over two years now, something that will be important to watch coming into the mid-term elections.

ADP National Employment ROSE by 219k in July, compared with the consensus estimate for a gain of 186k. Meanwhile, the revisions to the prior 3 months added an additional 11k to the previous estimate. Over the past 12 months, private payrolls have increased by an average of 193k per month, lifting employment to 1.9% ABOVE its year ago level.

Jobs in Goods-Producing Industries ROSE by 42k jobs but Manufacturing gained 23k workers. Moreover, Construction gained 17k jobs.

Meanwhile, Service-Producing Industries ROSE by 177k jobs with Professional/Business Services hiring 47k workers, Trade/Transport/Utilities adding 21k, and Financial Activities increasing by 15k workers.

Small Firms hired 52k workers, Medium-Sized Firms grew by 119k employees while Large Firms added 48k positions.

Article by Contingent Macro Advisors