ADP Employment: Sharply Lower As Construction Losses Suggest Weather At Play
April 3, 2019
Bottom Line: ADP said job growth was lower than expected in March at just 129k, about 80k below the longer-term averages as goods producing industries saw contraction. While February's tally was revised higher, it was not enough to offset the miss. That said, with a strong January print, the 3-month average change is still 196k, only slightly below the six-month and 12-month averages of 202 and 211k. Additionally, with the sharp declines across construction suggest some of March's weakness may be due to weather. Overall, while certainly a warning sign, this report is not enough to suggest a change yet in the steady trend towards tighter labor markets. Finally, this would normally suggest downside risk to Friday's payroll report, expected at 179k. But given the sharp downside miss in February for the government data, there has been a clear disconnect between these two surveys following the government shutdown.
ADP National Employment ROSE by 129k in March, compared with the consensus estimate for a gain of 175k.
Meanwhile, the revisions to the prior 3 months subtracted an additional 23k to the previous estimate. Over the past 12 months, private payrolls have increased by an average of 211k per month, lifting employment to 2.0% ABOVE its year ago level.
Jobs in Goods-Producing Industries FELL by 6k jobs as Manufacturing lost 3k workers. Moreover, Construction lost 6k jobs.
Meanwhile, Service-Producing Industries ROSE by 135k jobs with Professional/Business Services hiring 41k workers, Trade/Transport/Utilities adding 9k, and Financial Activities declining by -1k workers.
Small Firms hired 6k workers, Medium-Sized Firms grew by 63k employees while Large Firms added 60k positions.
Article by Contingent Macro Advisors