Uncategorized

ADP said the private sector added just 106k jobs in January, well below the estimate of 180k and that is the slowest monthly job gain since October 2019 if we don’t use the Covid timeframe. The service sector added 109k with gains again in leisure/hospitality leading the way. The ‘trade/transportation/utilities’ group lost 41k jobs. The goods producing sector saw a drop in construction jobs of 24k which could reflect the changed real estate market, particularly in residential and I don’t think many new office buildings are being built in some markets. Manufacturing added 23k, while the commodity related industries lost 2k jobs.

Small businesses (under 50 people) shed jobs while it was mixed for median sized companies and large ones added 128k jobs. As ADP has created its own wage metrics, it can’t be ignored considered the amount of employment data they have in hand. Pay gains of 15.4% y/o/y were seen for ‘job changers’ and by 7.3% for ‘job stayers.’ That’s pretty robust. The former was an increase from the prior month of 15.2% while the latter was the same. ADP did say this though but to no surprise to us after all the job announcements, “One outlier was the information sector, where pay growth decelerated from 7% to 6.6%.” I’ll say again, right now employees that need to be on premise to do their job have greater wage leverage than those that don’t.

Bottom line, the ADP is blaming this number on the poor weather in some places but after all, it is winter so I can’t go there as this should be seasonally adjusted and in some places like the Northeast it was pretty mild. While the pace of firing’s still remains modest overall as seen in jobless claims, the level of hiring’s continues to moderate. The 3 month average is 180k vs the 6 month average of 193k, the 2022 average of 307k and the 2019 average of 206k. Friday’s private sector payroll estimate is for a rise of 190k.

Treasury yields are at the lows of the morning in response.