February 2016 ADP Job Growth At 214,000 – Above Expectations

ADP reported non-farm private jobs growth at 214,000. The rolling averages of year-over-year jobs growth rate remains strong but the rate of growth continues in a downtrend (although insignificant again this month).

The market expected 165,000 to 205,000 (consensus 185,000) versus the 214,000 reported. These numbers are all seasonally adjusted;

In Econintersect‘s February 2016 economic forecast released in late January, we estimated non-farm private payroll growth at 120,000 (based on economic potential) and 200,000 (fudged based on current overrun of economic potential);

This month, ADP’s analysis is that small and medium sized business created 65 % of all jobs;

Manufacturing jobs contracted by 9,000.

97 % of the jobs growth came from the service sector;

January report (last month), which reported job gains of 205,000 was revised up to 193,000;

The three month rolling average of year-over-year job growth rate has been slowing declining since February 2015 – it is now 2.08% (statistically unchanged from last month’s 2.09%)

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:

Despite the turmoil in the global financial markets, the American job machine remains in high gear. Energy and manufacturing remain blemishes on the job market, but other sectors continue to add strongly to payrolls. Full-employment is fast approaching.

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

Large businesses showed surprisingly strong job gains in February, despite the continuation of economic trends that negatively impact big companies like turmoil in international markets and a strengthening dollar. The gains were mostly driven by the service sector which accounted for almost all the jobs added by large businesses.”

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. A graph in the caveats section below compares ADP employment to BLS.

Employment is a rear view indicator, and looking at this ADP data – the overall trend for the year-over-year rate of growth has been flat since mid-2010. (red line in graph below).

ADP Non-Farm Private Employment – Total (blue line) and Year-over-Year Change (red line)