ADP reported February 2014 non-farm private jobs growth at 139,000 – again weaker than previous months – with a significant reduction in last months jobs gain.
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- The market expected 100K to 192K (consensus 150K) versus the 139K reported . These numbers are all seasonally adjusted;
- In Econintersect’s February 2014 economic forecast released in late January, we estimated non-farm payroll growth at 115,000 (unadjusted based on economic potential) and 144,000 (fudged based on current overrun of economic potential).
- This month, ADP’s analysis is that small and medium sized business created over 80% of the jobs;
- Manufacturing contracted;
- Two-thirds of the jobs growth came from the service sector;
- January report (last month), which reported job gains of 175,000 was revised to 127,000 jobs.
- The three month average of job gains has been declining for the last three months.
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:
February was another soft month for the job market. Employment was weak across a number of industries. Bad winter weather, especially in mid-month, weighed on payrolls. Job growth is expected to improve with warmer temperatures.
Per Carlos A. Rodriguez, president and chief executive officer of ADP:
“The U.S. private sector added 139,000 jobs in February, well below the average over the last 12 months.
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 has been around 1.20% for much of the second half of 2013 – with the year-over-year jobs growth this month at 1.90% with a growth deceleration of 0.06% – which is indicating an increasing rate of decline.
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.
