April 2017 ADP Job Growth Is 177,000 - Near Expectations

ADP reported non-farm private jobs growth at 177,000. This was a weaker report than last month but still very good.

Analyst Opinion of ADP Employment Situation

This month the rate of ADPs private employment year-over-year growth remained in the tight range seen for the last 10 months. Even though the employment gains were lower this month - the year-over-year growth was statistically the same as last month.

ADP employment has not been a good predictor of BLS non-farm private job growth.

  • The market expected from Bloomberg / Econoday 110,000 to 200,000 (consensus 170,000) versus the 177,000 reported. These numbers are all seasonally adjusted;
  • In Econintersect's April 2017 economic forecast released in late March, we estimated non-farm private payroll growth at 110,000 (based on economic potential) and 205,000 (fudged based on current overrun of economic potential);
  • This month, ADP's analysis is that small and medium sized business created 79 % of all jobs.
  • Manufacturing jobs grew 11,000.
  • 93 % of the jobs growth came from the service sector.
  • The March ADP report (last month), which reported job gains of 263,000 was revised to 255,000.
  • The three month rolling average of year-over-year job growth rate is 1.9 % (insignificantly different than last month)

ADP changed their methodology starting with their October 2012 report, and ADP's real time estimates are currently worse than the BLS.

Per Mark Zandi, chief economist of Moody's Analytics:

Job growth slowed in April due to a pullback in construction and retail jobs. The softness in construction is continued payback from outsized growth during the mild winter. Brick-and-mortar retailers cut jobs in response to withering competition from online merchants.

Per Ahu Yildirmaz, VP and head of the ADP Research Institute.

In April we saw a moderate slowdown from the strong pace of hiring in the first quarter. Despite a dip in job creation, the growth is more than strong enough to accommodate the growing population as the labor market nears full employment. Looking across company sizes, midsized businesses showed persistent growth for the past six months.

Jobs growth of 150,000 or more is calculated by Econintersect to the minimum jobs growth to support population growth (see caveats below). The graph below shows ADP employment gains by month.

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Comments

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Power Hedge 1 year ago Contributor's comment

This is good, but the labor force participation rate is just barely above nearly all time lows. We need much stronger growth to really help all the people without work.

Steven Hansen 1 year ago Author's comment

this is a complex issue - i have a post which will be published on Saturday that details my position. most economists believe we are near full employment due to a demographic shift of the population [i do not but the demographic shift needs to be considered when using participation rates].

Power Hedge 1 year ago Contributor's comment

Yes but I was actually talking about the age 25-54 participation rate which should exclude things like retirees, etc.

Steven Hansen 1 year ago Author's comment

your comment in this context is spot on.