ADP reported March 2014 non-farm private jobs growth at 191,000 – stronger than the previous two months – with a significant increase in last months jobs gain.
- The market expected 150K to 220K (consensus 193K) versus the 191K reported . These numbers are all seasonally adjusted;
- In Econintersect’s March 2014 economic forecast released in late February, we estimated non-farm payroll growth at 120,000 (unadjusted based on economic potential) and 170,000 (fudged based on current overrun of economic potential).
- This month, ADP’s analysis is that small and medium sized business created 65% of the jobs;
- Manufacturing marginally expanded;
- Two-thirds of the jobs growth came from the service sector;
- February report (last month), which reported job gains of 139,000 was revised to 178,000 jobs.
- The three month rolling average of job growth is statistically unchanged this month.
ADP had been the best real time indicator of jobs growth, and we are monitoring their current new methodology which began with their October 2012 report.
Per Mark Zandi, chief economist of Moody’s Analytics:
The job market is coming out from its deep winter slumber. Job gains are consistent with the pace prior to the brutal winter. The gains are broad based across industries and business size classes. Even better numbers are likely in coming months as the weather warms.
Per Carlos A. Rodriguez, president and chief executive officer of ADP:
The 191,000 U.S. private sector jobs added in March is slightly above the twelve-month average. Hopefully, this could be a sign there is more growth to come.
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. A graph in the caveats section below compares ADP employment to BLS.
Employment is a rear view indicator, and looking at this ADP data – the overall trend for the year-over-year rate of growth has been flat since mid-2010. (red line in graph below). The year-over-year jobs growth this month is 1.97% with a growthacceleration of 0.04%.
ADP Non-Farm Private Employment – Total (blue line) and Year-over-Year Change (red line)
Small and medium sized business historically create most of the new jobs (analysis here) when using the ADP data. A continuing take from the ADP data is that small and medium size business continue to be the employment driver. However, the BLS totally disagrees (see caveats below). The current ADP methodology is showing more jobs growth in big business (and therefore less in small business). Likely they are slowly correcting their data base.
