January 2020 ADP Employment Grew 174,000

ADP reported non-farm private jobs growth of 174,000 which was above expectations. A quote from the ADP authors:

Although job losses were previously concentrated among small and midsized businesses, we are now seeing signs of the prolonged impact of the pandemic on large companies as well.

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 -85,000 to 285,000) - consensus 50,000. These numbers are all seasonally adjusted.
  • In Econintersect's January 2021 economic forecast released in late December 2020, we estimated non-farm private payroll growth at 200,000 (based on economic potential) and 500.000 (fudged based on current overrun / under-run of economic potential). [because the decline was so steep and the recovery so steep, our forecast methodology is not accurate in this period]
  • This month, ADP's analysis is that small and medium-sized businesses contributed 77.6 % of the job gains.
  • Manufacturing jobs increased 1,000
  • The service sector contributed 89.7 % of jobs growth
  • The current employment level is 7.3 % below the level one year ago.
  • The December ADP report (last month), which reported job loss of 123,000 was revised to a job loss of 78,000

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

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

The labor market continues its slow recovery amid COVID-19 headwinds. Although job losses were previously concentrated among small and midsized businesses, we are now seeing signs of the prolonged impact of the pandemic on large companies as well.

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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