February 2021 ADP Employment Grew 117,000

ADP reported non-farm private jobs growth of 117,000 which was above expectations. A quote from the ADP authors:

The labor market continues to post a sluggish recovery across the board.

Analyst Opinion of ADP Employment Situation

Last month's employment loss was revised upward. It will be interesting to see what the BLS says is jobs growth.

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

  • The market expected from Econoday 100,000 to 256,000) - consensus 165,000. These numbers are all seasonally adjusted.
  • In Econintersect's February 2021 economic forecast released in late December 2020, we estimated non-farm private payroll growth at 200,000 (based on economic potential).
  • This month, ADP's analysis is that small and medium-sized businesses contributed 76 % of the job gains.
  • Manufacturing jobs declined 14,000
  • The service sector had all the jobs gains as the good producing sector's employment declined
  • The current employment level is 7.4 % below the level one year ago.
  • The January ADP report (last month), which reported job gain of 174,000 was revised to a job gain of 195,000

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

Per Nela Richardson, chief economist, ADP:

The labor market continues to post a sluggish recovery across the board. We're seeing large-sized companies increasingly feeling the effects of COVID-19, while job growth in the goods producing sector pauses. With the pandemic still in the driver's seat, the service sector remains well below its pre-pandemic levels; however, this sector is one that will likely benefit the most over time with reopenings and increased consumer confidence.

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

Employment is a rearview indicator, and looking at this ADP data - the overall trend for the year-over-year rate of growth has been disrupted by the coronavirus. (red line in the graph below).

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