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ADP Employment: Strong Gains

January 8, 2020

Bottom Line: ADP's headline jobs figure for December was sharply stronger than expected after a downside surprise in November. There were also net positive revisions to prior data. Professional and business services added 61k, an unusually strong gain. Jobs in trade and transportation also rebounded sharply after shedding jobs in November. The manufacturing sector remained weak, shedding jobs again in December after a one-off gain in November. Overall, three- and six-month average job gains now stand at 159k and 151k, respectively, close to the 12-month average of 163k but still well below 2018's pace of 213k. This suggests labor markets have settled into a steady, more modest pace of growth. While these data do not include government workers, this report would suggest upside risk to the 160k consensus for Friday.

ADP National Employment ROSE by 202k in December, compared with the consensus estimate for a gain of 160k. Meanwhile, the revisions to the prior 3 months added an additional 22k to the previous estimate. Over the past 12 months, private payrolls have increased by an average of 163k per month, lifting employment to 1.5% ABOVE its year ago level.

Jobs in Goods-Producing Industries ROSE by 29k jobs but Manufacturing lost 7k workers. Moreover, Construction gained 37k jobs.

Service-Producing Industries ROSE by 173k jobs with Professional/Business Services hiring 61k workers, Trade/Transport/Utilities adding 78k, and Financial Activities increasing by 10k workers.

Small Firms hired 69k workers, Medium-Sized Firms grew by 88k employees while Large Firms added 45k positions.

Article by Contingent Macro Advisors