ADP reported non-farm private jobs growth at 227,000 which was above expectations.

Analyst Opinion of ADP Employment Situation

This month the rate of ADPs private employment year-over-year growth is slightly above 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 Econoday 155,000 to 200,000 (consensus 180,000). These numbers are all seasonally adjusted.
  • In Econintersect‘s October 2018 economic forecast released in late September, we estimated non-farm private payroll growth at 230,000 (based on economic potential) and 215,000 (fudged based on current overrun / under-run of economic potential).
  • This month, ADP’s analysis is that small and medium-sized business created 55 % of all jobs [historically a very small percentage].
  • Manufacturing jobs grew 17,000.
  • 83 % of the jobs growth came from the service sector.
  • The September ADP report (last month), which reported job gains of 230,000 was revised to 218,000
  • The three month rolling average of year-over-year job growth rate is 1.9 % (same as 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 bounced back strongly last month despite being hit by back-to-back hurricanes. Testimonial to the robust employment picture is the broad-based gains in jobs across industries. The only blemish is the struggles small businesses are having filling open job positions.

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

    Despite a significant shortage in skilled talent, the labor market continues to grow. We saw significant gains across all industries with trade and leisure and hospitality leading the way. We continue to see larger employers benefit in this environment as they are more apt to provide the competitive wages and strong benefits employees desire.

    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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