December 2017 ADP Job Growth Is 250,000

ADP reported non-farm private jobs growth at 250,000.

Analyst Opinion of ADP Employment Situation

This month the rate of ADPs private employment year-over-year growth remained in the tight range seen over the last year.

ADP employment has not been a good predictor of BLS non-farm private job growth.

The market expected from Bloomberg / Econoday 165,000 to 220,000 (consensus 185,000) versus the 250,000 reported. These numbers are all seasonally adjusted;

In Econintersect‘s December 2017 economic forecast released in late November, we estimated non-farm private payroll growth at 165,000 (based on economic potential) and 185,000 (fudged based on current overrun / under-run of economic potential).

This month, ADP’s analysis is that small and medium sized business created 78 % of all jobs [a relatively small percentage but same as last month].

Manufacturing jobs grew 9,000.

89 % of the jobs growth came from the service sector.

The November ADP report (last month), which reported job gains of 190,000 was revised to 185,000

The three month rolling average of year-over-year job growth rate is 2.1 % (up 0.1 % from last month)

ADP changed their methodology starting with their October 2012 report, and ADP’s real time estimates are currently worse than the BLS.

Per Mark Zandi, chief economist of Moody’s Analytics:

The job market ended the year strongly. Robust Christmas sales prompted retailers and delivery services to add to their payrolls. The tight labor market will get even tighter, raising the specter that it will overheat.

Per Ahu Yildirmaz, VP and head of the ADP Research Institute.

We’ve seen yet another month where the labor market has shown no signs of slowing Throughout the year there was significant growth in services except for an overall loss of jobs in the shrinking information sector. Looking at company size, small businesses finished out 2017 on a high note adding more than double their monthly average for the past six 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.

Employment is a rear view indicator, and looking at this ADP data – the overall trend for the year-over-year rate of growth has remained in a tight range for the last year. (red line in graph below).