ADP Employment: Sharp Rebound After Two Slow Months
July 31, 2019
Bottom Line: ADP said job growth was nealry 156k in July, above expectations and well above June gains that were revised from 102k to 112k. Construction jobs rebounded after two months of job losses. Professional and business service jobs also saw accelerating gains. While the three-month average now stands at just 104k, well below the six- and 12-month averages, volatile sectors have held down gains. Seeing a sharp rebound in sectors like construction suggests it is too early to believe the last three months is the start of a new slower trend in job growth. Finally, ADP data do not account for government workers which are included in the Employment Situation headline number, and this would suggest the risk is for modest upside to the consensus of 165k for Friday's nonfarm payroll release. ADP National Employment ROSE by 156k in July, compared with the consensus estimate for a gain of 150k. Meanwhile, the revisions to the prior 3 months added an additional 14k to the previous estimate. Over the past 12 months, private payrolls have increased by an average of 183k per month, lifting employment to 1.7% ABOVE its year ago level. Jobs in Goods-Producing Industries ROSE by 9k jobs as Manufacturing gained 1k workers. Moreover, Construction gained 15k jobs. Meanwhile, Service-Producing Industries ROSE by 146k jobs with Professional/Business Services hiring 44k workers, Trade/Transport/Utilities adding 27k, and Financial Activities increasing by 11k workers. Small Firms hired 11k workers, Medium-Sized Firms grew by 67k employees while Large Firms added 78k positions.
Article by Contingent Macro Advisors