ADP Employment Continues To Lag Payrolls As Goods-Producing, Construction Jobs Slide

Following June's epic bounce-back in nonfarm payrolls - the biggest delta to ADP in 6 years - Zandi and his crew at ADP 'got back to work'. June's 172k print was revised higher to 176k with July's 179k print beating expectations of 170k modestly (but still well below the payrolls levels). Once again goods-producing jobs fell (down 6k) as Services dominated (+185k) as ADP warns “this month’s employment number falls short of the 12-month average primarily because of slowing in small business hiring.” The weakness in construction spending is echoed in ADP's reported slide in construction jobs.

ADP continues to lag payrolls with notable increase in volatility...

And the tumble in construction jobs suggests construction spending is set to notably tumble...

Full breakdown below:

The charts:

Change in Nonfarm Private Employment

Change in Total Nonfarm Private Employment

Change in Total Nonfarm Private Employment by Company Size

Change in Total Nonfarm Private Employment by Selected Industry

As ADP details:

Goods-producing employment was down by 6,000 jobs in July, following June losses of 28,000. The construction industry lost 6,000 jobs, following June losses of 4,000 jobs. Meanwhile, manufacturing gained 4,000 jobs after losing 15,000 the previous month.

Service-providing employment rose by 185,000 jobs in July, fewer than June’s 203,000 jobs. The ADP National Employment Report indicates that professional/business services contributed 59,000 jobs, down from June’s 78,000. Trade/transportation/utilities increased by 27,000 jobs in July, down from 41,000 jobs added the previous month. Financial activities added 11,000 jobs, following last month’s gain of 9,000 jobs.

“This month’s employment number falls short of the 12-month average primarily because of slowing in small business hiring,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “As the labor market continues to tighten, small businesses may increasingly face challenges when it comes to offering wages that can compete with larger businesses.”

Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth remains strong, but is moderating as the economy approaches full employment. Businesses are having a more difficult time filling open job positions, which are near record highs. The nation’s biggest economic problem will soon be the lack of available workers.”

Infographic: