Reclaiming Common Sense

The ADP jobs numbers missed expectations - Good Revisions to September

What does it all mean? We will See on Friday

The ADP Private Sector Payroll Report is released the Wednesday prior to the Monthly Employment Situation Report, or Jobs Report. The ADP report differs from the Non-farm Payroll report in two major ways: The ADP report does not release non-seasonally adjusted data and the ADP report does not include the Government Sector Jobs.

It was expected to see month to month growth in all sectors except IT and possibly Natural Resources (Mining and Logging.) The largest growth sectors were expected to be Education and Health Services (EHS,) Leisure and Hospitality (LAH,) Professional Business Services (PBS,) Manufacturing, and Trade, Transportation, and Utilities (TTU.)  The month to month data indicates that we should grow 0.14% to 0.17% or roughly 181,000 to 220,000 jobs. We could grow as little as 0.11% (142,000) or as much as 0.19% (246,000.) The sweet spot is roughly 192,000 to 201,000 jobs.

We are expected to see November to November growth in all sectors. The sectors expected to have the largest growth rates are Construction, Natural Resources, PBS, LAH, and EHS. It was anticipated that growth should fall between 1.56% and 1.63% or 172,000 to 261,000 payroll positions. The midpoint here is roughly 216,000 positions.

Current Year Growth is only 145,000 positions a month. We have added 1,445,000 private sector payroll positions according to the ADP survey. Something had to give.

It's the Economy.e net-net was that were should have reported between 175,000 and 215,000 payroll positions added this month, with roughly 195,000 positions added during November.

We saw month to month growth of just 67,000 jobs (after an upward revision of 27,000 to October.) Even 94,000 potions is weak compared to a projection of a minimum of 145,000 position and an expectation of roughly 195,000 positions. The largest growth was in Other Services (OS,) EHS, Financial Services (FIRE,) and PBS. We saw contraction in M/L, Manufacturing, and TTU. There was no change in Construction. It was a mixed bag.

We saw November to November growth of 1.50%. We saw growth in all sectors except IT and M/L. We have seen perennial weakness in IT growth. The M/L drop could be expected based on the rimming of rig counts. We have added 1.664 million jobs this year, or roughly 151,000 payroll positions a month.

What does this mean for Friday? Not much. Remember that this is a different data set than either the Current Population Survey (CPS) jobs and unemployed worker data set or the Current Employment Statistics (CES) worker and wages data. Friday's headline Non-Farm Payroll data includes government workers while the ADP Private Sector Payroll data does not include government workers. The jobs report forecast article pointed to a spike in government workers, meaning that the NFP number could be significantly higher than the "private sector" number reported by ADP.  Last month we had 131,000 SA CES private sector jobs add - significantly higher than the original ADP of 94,000, and still higher than the new 121,000 positions.

Watch the revisions.

It's the Economy.