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Wednesday, May 1, 2013

ADP Says 119,000 Jobs Added in April

ADP numbers for April 2013 show continued private-sector job growth, but lower growth than expected as private employers add 119,000 jobs.

The monthly jobs report from the payroll processor ADP is usually seen as a bellweather of the national jobs report from the Bureau of Labor Statistics that  is released a couple of days later.  This morning's ADP report seems to indicate that, while the private sector continued to add jobs for the 38th consecutive month, job growth was weaker than last month and weaker than anticipated.

ADP's numbers are based on their own payroll transactions, "
Bureau of Labor Statistics employment data, and the Philadelphia Federal Reserve Bank’s AruobaDiebold-Scotti Business Conditions Index. The sample size of the ADP data set (is derived from data) which accounts for more than 20 percent of all U.S. private sector employees."  (However, BLS employment reports are not released until Friday.) 

We'll have to wait until Friday (May 3rd) to see if the BLS agrees.

ADP writes:
Private-sector employment increased by 119,000 from March to April, on a seasonally adjusted basis. (The estimated gain from February to March was revised down to 131,000).


  • Small businesses (1-49 employees) +50,000 
  • Medium businesses (50-499 employees) +26,000
  • Large businesses (500 or more employees) +43,000
 “During the month of April 2013, U.S. private sector employment increased by 119,000 jobs, representing the slowest pace of expansion since September 2012”

From MSNBC's Money, under a headline that says "Futures Mixed on Lackluster Jobs Numbers from ADP":

U.S. stock futures were mixed Wednesday ahead of a flood of economic indicators and corporate earnings, after a lukewarm report on jobs.
A survey by the payroll processor ADP indicated that U.S. companies added the fewest jobs in seven months in April.
The report from ADP suggests that government cutbacks on top of tax hikes to start the year are weighing on hiring decisions.

The ADP report also shows that most job growth occurred in the service-providing sector which added 113,000 out of the 119,000 jobs last month.
Mark Zandi, chief economist of Moody’s Analytics, is quoted in the ADP report:
Job growth appears to be slowing in response to very significant fiscal headwinds. Tax increases and government spending cuts are beginning to hit the job market. Job growth has slowed across all industries and most significantly among companies that employ between 20 and 499 workers. 

When attempting to make any sense of this ADP report, here are a few things to consider:

  • This is an estimate based mostly on ADP's survey of its payroll processing private-sector clients.  Over time, it moves in parallel with the government's BLS Establishment numbers, but it is not perfectly in synch with the government's numbers.  Also, the government reports may be more accurate in tallying small startups which may not be using a payroll processing service.  The ADP numbers usually run about 300,000 to 600,000 lower than the BLS private jobs numbers in total jobs, not in increases or decreases of jobs.
  • To reiterate what I mentioned last month, the stock market moves up or down not in concert with any reports of job growth (we haven't had any decline in total private jobs in three years.), but in concert with reports of job growth compared to what the pundits THINK the reports should say.  This ADP report, if supported by BLS data, still shows an increase of 119,000 jobs, which is an improvement from last month, but the pundits expected more jobs so it is seen as a disappointment.
  • Headlines are often sensational and absurd.  

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