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US: ADP Employment Report
| Consensus | Consensus Range | Actual | Previous | Revised | |
| Private Payrolls - M/M | 85,000 | 40,000 to 140,000 | 109,000 | 62,000 | 61,000 |
Highlights
The ADP national employment report for April shows private payrolls up 109,000 after an increase of 61,000 in March. The rise is above the consensus of up 85,000 in the Econoday survey of forecasters. Payrolls are higher in most industries, although substantial gains continue to be concentrated in a few narrow sectors. Hiring took place mainly at smaller businesses or the largest ones. Overall, the report indicates that where job openings exists and employers can find workers with the right skills and/or experience, hiring is ongoing. However, the April increase may in part be a seasonal story where sectors like construction and travel services add jobs in anticipation of increased activity. Should that activity not emerge, those workers could be cut.
The largest job gains are 61,000 in education/health services which has consistently been a source of rising payrolls in recent months. The 25,000 increase in trade, transportation, and utilities may include retail workers brought on for the spring months when households spend tax refunds at building and garden centers. The 10,000 rise in construction payrolls indicates that homebuilding may be picking up a bit, but also that some of those tax refunds may be going into home renovation and repair.
Payrolls are up 65,000 at small businesses (1-49 employees), up 2,000 at medium establishments (50-499 employees), and up 42,000 at large businesses (500+ employees). Small businesses may be finding the pool of available workers is improved but perhaps not less competitive as big businesses are able to better afford higher compensation.
The ADP pay insights report for April puts the median average annual increase in pay for job-stayers at 4.4 percent after 4.5 percent in March. This year-over-year increase has remained essentially unchanged for the past year. For job-changers, the median average annual increase is 6.6% in April and March, suggesting that at least for some workers there remains an incentive to switch jobs.
Market Consensus Before Announcement
Payrolls seen up a decent 85K after rising 62K in March.
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.
