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ADP Employment: Strongest Gains in 4+ Years

February 5, 2020

Bottom Line: ADP reported the strongest monthly job gains in over 4 years. January saw robust job growth in manufacturing and construction. Other service-producing gains also saw substantial gains as small and medium-sized businesses added to payrolls at unusually strong rates. Some of the substantial January gains were likely due to unusually mild weather. Nonetheless, three- and six-month average job gains now stand at 204k and 174k, respectively, well above the 12-month average of 165k, suggesting an acceleration in the trend. While these data do not include government workers, this report would suggest upside risk to the 162k consensus for Friday.

ADP National Employment ROSE by 291k in January, compared with the consensus estimate for a gain of 157k. Meanwhile, the revisions to the prior 3 months subtracted 5k from the previous estimate. Over the past 12 months, private payrolls have increased by an average of 165k per month, lifting employment to 1.5% ABOVE its year ago level.

Jobs in Goods-Producing Industries ROSE by 54k jobs as Manufacturing gained 10k workers. Moreover, Construction gained 47k jobs.

Meanwhile, Service-Producing Industries ROSE by 237k jobs with Professional/Business Services hiring 49k workers, Trade/Transport/Utilities adding 8k, and Financial Activities increasing by 2k workers.

Small Firms hired 94k workers, Medium-Sized Firms grew by 128k employees while Large Firms added 69k positions.

Article by Contingent Macro Advisors