August 2018 ADP Job Growth Is 163,000

ADP reported non-farm private jobs growth at 163,000 which was under expectations.

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 this year. Last month’s employment numbers were revised marginally downward.

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

The market expected from Nasdaq / Econoday 170,000 to 205,000 (consensus 182,000) versus the 163,000 reported. These numbers are all seasonally adjusted;

In Econintersect‘s August 2018 economic forecast released in late July, we estimated non-farm private payroll growth at 210,000 (based on economic potential) and 235,000 (fudged based on current overrun / under-run of economic potential).

This month, ADP’s analysis is that small and medium sized business created 81 % of all jobs [historically a relatively small percentage].

Manufacturing jobs grew 19,000.

85 % of the jobs growth came from the service sector.

The July ADP report (last month), which reported job gains of 219,000 was revised to 217,000

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 hot. Employers are aggressively competing to hold onto their existing workers and to find new ones. Small businesses are struggling the most in this competition, as they increasingly can’t fill open positions.

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

“Although we saw a small slowdown in job growth the market remains incredibly dynamic. Midsized businesses continue to be the engine of growth, adding nearly 70 percent of all jobs this month, and remain resiliant in the current economic climate.

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.