ADP reported non-farm private jobs growth at 235,000. This high number bounce is blamed on the recovery from the hurricanes.

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 third 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 155,000 to 340,000 (consensus 210,000) versus the 235,000 reported. These numbers are all seasonally adjusted;
  • In Econintersect‘s October 2017 economic forecast released in late September, we estimated non-farm private payroll growth at 165,000 (based on economic potential) and 185,000 (fudged based on current overrun of economic potential).
  • This month, ADP’s analysis is that small and medium sized business created 62 % of all jobs [very small percentage].
  • Manufacturing jobs grew 22,000.
  • 64 % of the jobs growth came from the service sector. [another unusually small percentage]
  • The September ADP report (last month), which reported job gains of 135,000 was revised to 110,000.
  • The three month rolling average of year-over-year job growth rate is 2.01 % (insignificantly different than last month’s 1.97%)

    • 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 rebounded strongly from the hit it took from Hurricanes Harvey and Irma. Resurgence in construction jobs shows the rebuilding is already in full swing. Looking through the hurricane-created volatility, job growth is robust.

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

    The job market remains healthy and hiring bounced back with one of the best performances we’ve seen all year. Although the service providing sector was hard hit last month due to the weather, we saw significant growth in professional services, especially in the higher paid professional technical jobs. Additionally, small businesses rebounded well from the impact of Hurricanes Harvey and Irma, posting very strong gains.

    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.

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