November 2017 ADP Job Growth Is 190,000

ADP reported non-farm private jobs growth at 190,000.

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.

When the goods sector of the economy is gaining more workers than historically – it is a warning that something is wrong. This is the fourth month in a row of the service sector weakness.

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

The market expected from Bloomberg / Econoday 159,000 to 235,000 (consensus 192,000) versus the 190,000 reported. These numbers are all seasonally adjusted;

In Econintersect‘s November 2017 economic forecast released in late October, we estimated non-farm private payroll growth at 170,000 (based on economic potential) and 165,000 (fudged based on current overrun / under-run of economic potential).

This month, ADP’s analysis is that small and medium sized business created 78 % of all jobs [a relatively small percentage].

Manufacturing jobs grew 40,000.

82 % of the jobs growth came from the service sector. [another relatively small percentage]

The October ADP report (last month), which reported job gains of 235,000 was not revised.

The three month rolling average of year-over-year job growth rate is 2.00 % (unchanged 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 red hot, with broad-based job gains across industries and company sizes. The only soft spots are in industries being disrupted by technology, brick-and-mortar retailing being the best example. There is a mounting threat that the job market will overheat next year.”

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

“The labor market continues to grow at a solid pace. Notably, manufacturing added the most jobs the industry has seen all year. As the labor market continues to tighten and wages increase it will become increasingly difficult for employers to attract and retain skilled talent.

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.