| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Private Payrolls - M/M | 68,000 | 60,000 to 100,000 | 54,000 | 104,000 | 106,000 |
Highlights
The ADP national employment report for August shows private sector payrolls up 54,000 after a minor upward revision to up 106,000 in July. The increase is below the consensus of up 68,000 in the Econoday survey of forecasters. Payroll gains are mixed. Sectors with gains were more plentiful than those with losses, but the decreases are more widespread than in recent months. The overall pace of hiring is slowing.
Goods-producers' payrolls are up 13,000 in August. There are increases of 4,000 in natural resources and mining, 16,000 in construction, and a decline of 7,000 in manufacturing. Despite weakness in the housing sector, construction hiring may be on the rise because employers have the chance to capture workers with needed skills as the supply of labor increases.
Service-providers'' payrolls are up 42,000 in August. Most of the increase rests with hiring of 50,000 in leisure and hospitality, and smaller gains of 15,000 in professional and business services, 7,000 in information, and 1,000 in other services. There are substantial decreases of 17,000 in trade, transportation, and utilities, 12,000 in education and health services, and 2,000 in financial activities.
Hiring by establishment size is up 12,000 for small businesses (1-49 workers), 25,000 for medium firms (50-499), and 18,000 for large establishments (500+).
The ADP pay insights shows the median annual increase in pay is 4.4 percent in August for those staying in their current jobs and up 7.1 percent for those changing jobs.
Goods-producers' payrolls are up 13,000 in August. There are increases of 4,000 in natural resources and mining, 16,000 in construction, and a decline of 7,000 in manufacturing. Despite weakness in the housing sector, construction hiring may be on the rise because employers have the chance to capture workers with needed skills as the supply of labor increases.
Service-providers'' payrolls are up 42,000 in August. Most of the increase rests with hiring of 50,000 in leisure and hospitality, and smaller gains of 15,000 in professional and business services, 7,000 in information, and 1,000 in other services. There are substantial decreases of 17,000 in trade, transportation, and utilities, 12,000 in education and health services, and 2,000 in financial activities.
Hiring by establishment size is up 12,000 for small businesses (1-49 workers), 25,000 for medium firms (50-499), and 18,000 for large establishments (500+).
The ADP pay insights shows the median annual increase in pay is 4.4 percent in August for those staying in their current jobs and up 7.1 percent for those changing jobs.
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.
