ADP said 475k private sector jobs were added in February, 100k more than expected and unexplainably the January print was revised to a gain of 509k vs the first read of 301k. The size of this revision alone makes this survey completely unreliable now to be honest.
There was big dispersion in where the jobs came from. Small businesses, those defined as having less than 50 employees, saw a drop of 96k with 95k of them shed from companies with less than 20 employees. Medium sized businesses added a modest 18k jobs and those with more than 1000 employees added a large 528k.
The service sector added 417k jobs vs 421k last month and leisure/hospitality again led the way with a net job gain of 170k vs 144k in the month prior. Transportation/Trade/Utilities contributed 98k vs 104k in January. There were job gains in professional/technical services, healthcare and some other sectors that were similar in pace to January.
On the goods side, manufacturing added 30k vs 50k last month and vs 69k in the month prior. Construction contributed 26k after a gain of 35k last month and 58k in the month before. The natural resource sector hired a net 2k which is on trend with the prior few months.
ADP said the increase in large business hiring relative to the drop for small ones was due to their better ability to compete for labor “with higher wages and benefit offerings” and smaller companies are struggling “to attract a limited pool of qualified workers.” I will say this also about all the state mandated minimum wage increases over the past few years: we of course want employees to earn more money, especially in the high inflation environment we are in but small businesses are at a MAJOR disadvantage in paying it relative to bigger and better capitalized ones.
Bottom line, ADP’s January jobs call ended up being awful as seen with today’s upward revision to around what the BLS told us last month. The February figure today puts it back around in line with the 6 month average of 544k.
Jay Powell’s prepared testimony revealed no new information. The Fed will end QE and hike rates by 25 bps in a few weeks. He specifically didn’t say 25 bps but said they will hike and we assume that will be the pace. He also reiterated that QT is coming soon. The situation in Ukraine and its impact “remain highly uncertain” as we thought he’d say. The Q&A hopefully will be interesting and I say ‘hopefully’ because many of the questions asked historically have a political slant to them.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.