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ADP Employment: Sharply Slower Job Growth

December 4, 2019

Bottom Line: ADP's headline jobs figure for November was sharply lower than expected. Goods producing sectors saw job declines for the third straight month with a trend towards net job losses since April. Service sector job gains were slower, well below trend, as very small businesses (fewer than 10 employees) shed jobs. Overall, three- and six-month average job gains now stand at 104k and 120k, respectively, down sharply from the 12-month average of 159k and 2018's pace of 213k. While these data do not include government workers, the trend in ADP's payroll suggest a clear slowing in the labor market over the last six months. This report would suggest downside risk to the 190k consensus for Friday.

ADP National Employment ROSE by 67k in November, compared with the consensus estimate for a gain of 135k. Meanwhile, the revisions to the prior 3 months added an additional 28k to the previous estimate. Over the past 12 months, private payrolls have increased by an average of 159k per month, lifting employment to 1.5% ABOVE its year ago level.

Jobs in Goods-Producing Industries FELL by 18k jobs as Manufacturing lost 6k workers. Moreover, Construction lost 6k jobs.

Service-Producing Industries ROSE by 85k jobs with Professional/Business Services hiring 28k workers, Trade/Transport/Utilities subtracting -16k, and Financial Activities increasing by 11k workers.

Small Firms hired 11k workers, Medium-Sized Firms grew by 29k employees while Large Firms added 27k positions.

Article by Contingent Macro Advisors