January 2017 ADP Job Growth Is 246,000 – Greatly Above Expectations

ADP reported non-farm private jobs growth at 246,000. This was a particularily strong report.

Analyst Opinion of ADP Employment Situation

This month the rate of ADPs private employment marginally increased. This report is very good with growth in almost every sector. Gee, President Trump has only been around a few days and employment is already stronger 🙂

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

The market expected from Bloomberg / Econoday 160,000 to 185,000 (consensus 168,000) versus the 246,000 reported. These numbers are all seasonally adjusted;

In Econintersect‘s January 2017 economic forecast released in late December, we estimated non-farm private payroll growth at 100,000 (based on economic potential) and 150,000 (fudged based on current overrun of economic potential);

This month, ADP’s analysis is that small and medium sized business created 67 % of all jobs.

Manufacturing jobs grew 15,000.

82 % of the jobs growth came from the service sector.

The December ADP report (last month), which reported job gains of 153,000 was revised to 151,000.

The three month rolling average of year-over-year job growth rate has been slowing declining since February 2015 – it is now 1.80 % (insignificantly better than last month’s 1.74%)

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:

2017 got off to a strong start in the job market. Job growth is solid across most industries and company sizes. Even the energy sector is adding to payrolls again.

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

The U.S. labor market is hitting on all cylinders and we saw small and midsized businesses perform exceptionally well. Further analysis shows that services gains have rebounded from their tepid December pace, adding 201,000 jobs. The goods producers added 46,000 jobs, which is the strongest job growth that sector has seen in the last two 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.