The ADP national employment report shows private payrolls up 146,000 in November. October had an unusually large revision lower to up 184,000 after up 233,000 in the prior report. The consensus for November in the Econoday survey of forecasters is up 165,000. The below expectations reading for November and downward revision for October point to softer labor market conditions than previously thought. However, the increases for both months remain consistent with a healthy labor market in a modestly expanding economy.

Payrolls are up 6,000 in the goods-producing sector in November with a sold gain of 30,000 in construction and rise of 2,000 in natural resources/mining nearly offset by a 26,000 decline in manufacturing.

Service-providers' payrolls are up 140,000 in November with increases in all industries. The largest rises are 50,000 in education/health services and 28,000 in trade/transportation/utilities.

Payrolls by establishment size in November shows small firms (1-49 employees) are down 17,000 while medium firms (50-499 employees) are up 42,000 and large firms (500+ employees) are up 120,000.
It is probably true that smaller firms remain at a competitive disadvantage in terms of compensation. The ADP pay insights reports that the median year-over-year increase for job-stayers is 4.8 percent, while job-changers have a median annual increase of 7.2 percent. There are still incentives for workers to seek new jobs even after the cooling in the labor market. Workers with the right skills and/or experience remain in demand.

A moderate rise in private payrolls is the call with ADP jobs expected up 165,000.

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.

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.