ADP reported non-farm private jobs growth at 241,000.

Analyst Opinion of ADP Employment Situation

This month the rate of ADPs private employment year-over-year growth remained in the tight range seen over the last year.

ADP employment has not been a good predictor of BLS non-farm private job growth.

  • The market expected from Bloomberg / Econoday 110,000 to 225,000 (consensus 180,000) versus the 241,000 reported. These numbers are all seasonally adjusted;
  • In Econintersect‘s March 2018 economic forecast released in late February, we estimated non-farm private payroll growth at 160,000 (based on economic potential) and 170,000 (fudged based on current overrun / under-run of economic potential).
  • This month, ADP’s analysis is that small and medium sized business created 72 % of all jobs [historically a relatively small percentage].
  • Manufacturing jobs grew 29,000.
  • 73 % of the jobs growth came from the service sector.
  • The February ADP report (last month), which reported job gains of 235,000 was revised to 246,000
  • The three month rolling average of year-over-year job growth rate is 1.8 % ( not significantly changed from last month)
  • ADP changed their methodology starting with their October 2012 report, and ADP’s real time estimates are currently worse than the BLS.

    Per Mark Zandi, chief economist of Moody’s Analytics:

    The job market is rip-roaring. Monthly job growth remains firmly over 200,000, double the pace of labor force growth. The tight labor market continues to tighten.

    Per Ahu Yildirmaz, VP and head of the ADP Research Institute.

    We saw impressive momentum in the first quarter of 2018 with more jobs added per month on average than in 2017. Midsized businesses added nearly half of all jobs this month, the best growth this segment has seen since the fall of 2014. The manufacturing industry also performed well, with its strongest increase in more than three years.

    Jobs growth of 150,000 or more is calculated by Econintersect to the minimum jobs growth to support population growth (see caveats below). The graph below shows ADP employment gains by month.

    Employment is a rear view indicator, and looking at this ADP data – the overall trend for the year-over-year rate of growth has remained in a tight range for the last year. (red line in graph below).

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