ADP Employment: Small Firms Miss Again

Bottom Line: ADP showed that hiring in August was at its slowest pace since last October. The slowdown was broad-based across industries but was led by small firms, a source of weaker growth for several months now. On a trend basis, there is little in this report to suggest this miss is anything more than normal volatility. ADP data do not account for government workers which are included in the Employment Situation headline number. Thus, this report still suggests some downside risk to Friday's non-farm payroll report, currently expected to show gains of 198k jobs. ADP National Employment ROSE by 163k in August, compared with the consensus estimate for a gain of 200k. Meanwhile, the revisions to the prior 3 months subtracted an additional 4k to the previous estimate. Over the past 12 months, private payrolls have increased by an average of 192k per month, lifting employment to 1.8% ABOVE its year ago level. Jobs in Goods-Producing Industries ROSE by 24k jobs as Manufacturing gained 19k workers. Moreover, Construction gained 5k jobs. Meanwhile, Service-Producing Industries ROSE by 139k jobs with Professional/Business Services hiring 38k workers, Trade/Transport/Utilities adding 21k, and Financial Activities increasing by 7k workers. Small Firms hired 21k workers, Medium-Sized Firms grew by 111k employees while Large Firms added 31k positions.