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ADP Employment: More Job Losses To End 2020

January 6, 2021
Bottom Line:   ADP reported lower employment across most sectors in businesses both large and small in December amid renewed shutdowns for the spike in Covid cases.  Sharply below the consensus for a gain of 75k, the decline of 123k jobs was dominated by job losses in the services industry, which continued to bear the brunt of the shutdowns.   But even manufacturing, which has mostly continued to lead the recovery, saw job losses.  Overall, this is a concerning report ahead of Friday's payroll report, leaving the potential for a downside miss versus expectations of +73k.  While some sectors like housing and manufacturing remained strong into year-end, weaker labor markets offer concern for consumption growth going forward. 
ADP National Employment FELL by -123k in December, compared with the consensus estimate for a gain of 75k.
Meanwhile, the revisions to the prior 3 months added an additional 2k to the previous estimate. Over the past 12 months, private payrolls have decreased by an average of -791k per month, pushing employment to 7.4% BELOW its year-ago level.
Jobs in Goods-Producing Industries FELL by 18k jobs as Manufacturing lost 21k workers. Against that, Construction gained 4k jobs.
Service-Producing Industries FELL by -105k jobs with Professional/Business Services hiring 12k workers, Trade/Transport/Utilities subtracting -51k, and Financial Activities increasing by 2k workers.
Small Firms fired 13k workers, Medium-Sized Firms grew by 37k employees whileLarge Firms cut 147k positions.