ADP said 242k private sector jobs were added in February following 119k in January. While that was above the estimate of 200k, the January figure was of course quite different than what the BLS told us. Of note, small businesses shed jobs, totaling 61k but was offset by the rise in hiring by medium and large companies. For a local restaurant or small business to compete for labor with Chipotle paying $20 an hour or Amazon doing the same, is really tough. Manufacturing added 43k jobs but construction fired a net 16k. With services, leisure/hospitality again was the biggest hirer, adding 83k while people in ‘professional/business services’ lost jobs.
Income growth is still really good but is moderating. For ‘job stayers’, pay rose 7.2% y/o/y, though the smallest gain in a year. A 10.1% rise for leisure and hospitality workers led the way. For ‘job changers’, wages rose by 14.3% but a comedown from the 14.9% seen in the month before.
Bottom line, while ADP’s chief economist referred to this job figure as “robust”, the pace of hiring is slowing as the 3 month average of job growth is 200k vs 202k over the past 6 months and which compares with the 12 month average of 274k. For perspective, ADP averaged 256k in 2018 and 206k in 2019. With respect to Friday’s BLS report, because of the huge upside seen in January, I would not be surprised to see a negative number for the sole reason of mean reversion. So, ADP said the 6 month number of private sector job gains are about 1.2mm (200k x 6 months). Over the past 5 months (so awaiting Friday’s tally), the BLS private sector job gain is already at 1.58mm. Over time these two data points should converge.
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.