| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Private Payrolls - M/M | 200,000 | 160,000 to 220,000 | 145,000 | 242,000 | 261,000 |
Highlights
The ADP national employment report shows private payroll gains of 145,000 in March after an upward revision to 261,000 in February. The increase is below the consensus of 200,000 in an Econoday survey. Although a monthly increase of 145,000 is a healthy one, it may read as a disappointment compared to expectations. The data may also lead to some downgrades in forecasts for private payrolls in the government employment report for March set for Friday at 8:30 ET.
Goods-producers' payrolls see a gain of 70,000 in March. While manufacturers cut 30,000 jobs, construction added 53,000 and natural resources and mining rose 47,000. Despite the slowdown in some residential construction, the industry is hiring.
Service-providers' payrolls are up 75,000 in March with a mixed performance by industry. Leisure and hospitality had the largest increase at up 98,000, followed by trade, transportation, and utilities at up 56,000. The largest declines in service sector payrolls are 51,000 in financial activities and 46,000 in professional and business services. Disruptions in the banking sector may be leading to layoffs there and the tech sector layoffs are ongoing.
Small businesses are finally starting to consistently add to payrolls as more workers become available and the upward pressure on wages eases a bit. Small businesses (1-49 workers) added 101,000 workers in March. Mid-sized companies (50-499) increased payrolls by 33,000 in March. Large-sized companies which had been getting most of the available workers rose only 10,000 in March. Bigger companies are in the process of restructuring after a hiring binge in the last couple of years and/or preparing for an economic downturn. Small companies are benefiting from the easing in labor supply.
Upward wage pressures are easing. For job-stayers, wage gains are 6.9 percent year-over-year in March compared to up 7.2 percent in February. For job-changers, the increase is 14.2 percent year-over-year for March compared to up 14.3 percent in February. There is still an incentive for workers to switch jobs for higher pay, but some workers may opt for increased job security in an uncertain economic environment.
Goods-producers' payrolls see a gain of 70,000 in March. While manufacturers cut 30,000 jobs, construction added 53,000 and natural resources and mining rose 47,000. Despite the slowdown in some residential construction, the industry is hiring.
Service-providers' payrolls are up 75,000 in March with a mixed performance by industry. Leisure and hospitality had the largest increase at up 98,000, followed by trade, transportation, and utilities at up 56,000. The largest declines in service sector payrolls are 51,000 in financial activities and 46,000 in professional and business services. Disruptions in the banking sector may be leading to layoffs there and the tech sector layoffs are ongoing.
Small businesses are finally starting to consistently add to payrolls as more workers become available and the upward pressure on wages eases a bit. Small businesses (1-49 workers) added 101,000 workers in March. Mid-sized companies (50-499) increased payrolls by 33,000 in March. Large-sized companies which had been getting most of the available workers rose only 10,000 in March. Bigger companies are in the process of restructuring after a hiring binge in the last couple of years and/or preparing for an economic downturn. Small companies are benefiting from the easing in labor supply.
Upward wage pressures are easing. For job-stayers, wage gains are 6.9 percent year-over-year in March compared to up 7.2 percent in February. For job-changers, the increase is 14.2 percent year-over-year for March compared to up 14.3 percent in February. There is still an incentive for workers to switch jobs for higher pay, but some workers may opt for increased job security in an uncertain economic environment.
Market Consensus Before Announcement
Forecaster see ADP's March employment number at 200,000. This would compare with February growth in private payrolls reported by the Bureau of Labor Statistics of 265,000. ADP's number for February was 242,000.
Definition
The national employment report from Automated Data Processing Inc. is computed from ADP payroll data and offers advance indications on the U.S. workforce. ADP's data cover more than 500,000 companies totaling more than 25 million employees. The report is produced by ADP Research Institute in collaboration with Stanford Digital Economy Lab.
Description
Market players have become accustomed to the excitement on employment Friday and realize the rich detail of the monthly employment situation can help set the tone for the entire month. While economists have improved their nonfarm payroll forecasts over the years, it is not unusual to see surprises on employment Friday. To that end, the ADP's national employment report can help improve the payroll forecast by providing information in advance of the employment report.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking jobs, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking jobs, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
