ADP Misses, Prints 179K On Expectations Of 195K

by Tyler Durden

And so the first warning shot for this Friday’s NFP comes, which we believe will be substantially below consensus, in the form of the ADP report, which comes at 179K, down from a revised 207K, and well below expectations of 198K. And while the number is very disappointing, both construction and financial activities posted a solid up month, with financial jobs posting a second consecutive monthly increase after over 3 years of drops.

From the report:

Today’s ADP National Employment Report shows that labor market conditions continued to improve in April, but only at a moderate pace. The increase of 179,000 is close to consensus expectations both for today’s report and for Friday’s jobs report from the U.S. Bureau of Labor Statistics.

While employment accelerated sharply around the turn of the year, the monthly gains have been holding fairly steady around 200,000 since then. Employment growth at this pace is consistent with only modest declines in the unemployment rate.

Employment among large businesses, defined as those with 500 or more workers, increased by 11,000, while employment among medium-size businesses, defined as those with between 50 and 499 workers, increased by 84,000. Employment for small businesses, defined as those with fewer than 50 workers, rose 84,000 in April.

In April, employment in the construction industry increased 9,000, only the second monthly increase since June 2007. Since December 2010, however, construction employment has, on balance, risen, suggesting that finally employment in this sector has bottomed out. The total decrease in construction employment since its peak in January 2007 is 2,115,000.

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Employment in the financial services sector increased 4,000 in April.

Full chart:

Fins and concstruction jobs:

And Goldman’s take:

MAIN POINTS:

1. The ADP forecast of private nonfarm payroll employment was +179k in April, slightly less than the consensus forecast of +198k. Growth in March was revised up to +207k from +201k. The ADP report combines proprietary information on employee headcounts with publically-available data (jobless claims and past payroll changes) to forecast the BLS measure of private payroll growth. Today’s report was broadly consistent with consensus expectations for Friday’s Employment Report, though it may indicate a small amount of downside risk.

2. The modest cooling in employment growth was relatively broad-based. Manufacturing employment growth slowed to +25k from +35k previously, and service-providing employment growth slowed to +138k from +169k. There was little evidence of renewed weakness in construction jobs: total employment in goods-producing sectors (which includes manufacturing, construction and mining) actually accelerated to +41k from +38k last month. By firm size, employment gains were concentrated in small and mid-sized businesses.

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