ADP Employment: Another Month of Solid Gains

Bottom Line:   ADP reported stronger than expected job gains in October for the second month in a row. There were modest negative revisions to September data but not enough to negate the positive surprise. Hiring was robust across industries and all sizes of businesses. Leisure and hospitality led the gains, as has been typical. Construction and manufacturing hiring rose sharply, despite reports of skilled labor shortages. On a trend basis, this report shows steady job creation with the three-months ended in October running at 468k, below the six-month pace of 558k but above the 12-month pace of 424k.  Moreover, this report suggests an upside risk to the consensus forecast of 450k for nonfarm payroll growth on Friday.ADP National Employment ROSE by 571k in October, compared with the consensus estimate for a gain of 400k. Meanwhile, the revisions to the prior 3 months subtracted an additional 75k to the previous estimate. Over the past 12 months, private payrolls have increased by an average of 424k per month, lifting employment to 4.3% ABOVE its year-ago level.

Jobs in Goods-Producing Industries ROSE by 113k jobs but Manufacturing gained 53k workers. Moreover, Construction gained 54k jobs.  Meanwhile, Service-Producing Industries ROSE by 458k jobs with Professional/Business Services hiring 88k workers, Trade/Transport/Utilities adding 78k, and Financial Activities increasing by 15k workers.Small Firms hired 115k workers, Medium-Sized Firms grew by 114k employees while Large Firms added 342k positions.