Reclaiming Common Sense

Last Month's March ADP Payroll data was a Disappointment after a strong January ADP Number was revised lower than last reported.

The ADP Payroll report provides some insight as to what we might expect when the monthly Employment Situation report, or Jobs Report, is released by the federal government two days later. The growth rates change dramatically month to month. Overall annual job growth has been strengthening. What can we expect from the April ADP Payroll Report.

The ADP Payroll data closely resembles the Current Employment Statistics (CES) private sector worker data. The "headline" jobs number is the non-farm payroll (NFP) data. The NFP data includes government workers while the private sector data, and the ADP data, do not count government jobs.

Month to Month Growth Should be reported in all sectors. We have experienced March to April growth of 0.14% the past three April reports, according to the update ADP data. We saw 0.15% during April 2015 and 0.16 during April 2004. We have seen April Spikes of 0.24% and 0.27% during April since the end of the Recession. If we grow in the 0.14 to 0.16% range then we will see 180,000 to 205,000 payroll positions added. There is the possibility of a growth rate up to 0.18% or roughly 231,000 payroll positions added this April.

All sectors should add to their payrolls, month to month, this April. The largest growth, in percentage terms, are Natural Resources (Mining/Logging,) Construction, Education and Health Services (EHD,) Professional Business Services (PBS) and Leisure and Hospitality (LAH.) Education and Health services, PBS, and LAH are three of the largest sectors, meaning that the March to April gains could lean towards the high side.

All Sectors should add jobs to their April 2018 Levels. It is not always true that when we add payroll position month to month that we add from the prior year's current month level. This month it appears that we should grow 1.96% to 2.06% from last April's Payroll level. This would be a faster pace than April 2017 when it was 1.76% and faster than April 2018 when it was 1.81%. If we grow at the roughly 2.00% pace then we will add at least 182,000 payroll positions.  We had a string of growth well over 2.00% before the February ADP Payroll Report Revisions. Expect a number between 180,000 and 240,000 or roughly 210,000 payroll positions added this April.

All sectors should record annual growth, even Information. The largest growth rates should be in Natural Resources, Construction, PBS, EHS and Manufacturing. LAH comes in at 6th place for percentage growth. IT is one of the sectors that could grow month to month and not grow annually, depending upon the month of the year. This sector has grown April to April since 2011.

Watch the Revisions. If the data from March is revised up by 30,000 payroll positions then that "borrows" 30,000 positions from April. This could mean a 215,000 month being reported as 185,000. The opposite is also true. A downward revision to a weak March ADP report by 30,000 positions could boost a 185,000 number to 215,000.

This ADP payroll report may receive considerable attention. We should see all sectors grow month to month and April to April. We have been growing over 2.00% and we should continue growing at over 2.00% a year. This means that we could see strong private sector growth reported this Friday in the Government data.

It's the Economy.