September 2018 ADP Job Growth Is 230,000 -

September 2018 ADP Job Growth Is 230,000

Oct 03, 2018Jeremy ParkinsonFinance0

ADP reported non-farm private jobs growth at 230,000 which was above expectations.

Analyst Opinion of ADP Employment Situation

This month the rate of ADPs private employment year-over-year growth is slightly above the tight range seen over this year. Last month’s employment numbers were revised marginally downward.

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

The market expected from Econoday 155,000 to 195,000 (consensus 177,000). These numbers are all seasonally adjusted;

In Econintersect‘s September 2018 economic forecast released in late August, we estimated non-farm private payroll growth at 220,000 (based on economic potential) and 235,000 (fudged based on current overrun / under-run of economic potential).

This month, ADP’s analysis is that small and medium-sized business created 81 % of all jobs [historically a relatively small percentage].

Manufacturing jobs grew 7,000.

80 % of the jobs growth came from the service sector.

The August ADP report (last month), which reported job gains of 163,000 was revised to 168,000

The three month rolling average of year-over-year job growth rate is 1.9 % (up from last month’s 1.8%)

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:

“The job market continues to power forward. Employment gains are broad-based across industries and company sizes. At the current pace of job creation, unemployment will fall into the low 3%’s by this time next year

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

The labor market continues to impress. Both the goods and services sectors soared. The professional and business services industry and construction served as key engines of growth. They added almost half of all new jobs this month.

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.

Employment is a rear view indicator, and looking at this ADP data – the overall trend for the year-over-year rate of growth has remained in a tight range for the last year. (red line in graph below).