March 2016 ADP Job Growth At 200,000 - At Expectations

ADP reported non-farm private jobs growth at 200,000. The rolling averages of year-over-year jobs growth rate remains strong but the rate of growth continues in a downtrend (although unchanged this month).

The market expected 165,000 to 225,000 (consensus 203,000) versus the 200,000 reported. These numbers are all seasonally adjusted;

In Econintersect‘s March 2016 economic forecast released in late February, we estimated non-farm private payroll growth at 130,000 (based on economic potential) and 210,000 (fudged based on current overrun of economic potential);

This month, ADP’s analysis is that small and medium sized business created 80 % of all jobs;

Manufacturing jobs grew by 3,000.

96 % of the jobs growth came from the service sector;

February report (last month), which reported job gains of 214,000 was revised down to 205,000;

The three month rolling average of year-over-year job growth rate has been slowing declining since February 2015 – it is now 2.08% (statistically unchanged from last month’s 2.08%)

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 continues on its amazing streak. The March job gain of 200,000 is consistent with average monthly job growth of the past more than four years. The only industry reducing payrolls is energy as has been the case for over a year. All indications are that the job machine will remain in high gear.

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

The Trade, Transportation and Utilities sector had its best month of employment gains since last June. Steady employment growth and accelerating wage growth in the workforce appear to be benefitting the Trade segment in particular.

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 been flat since mid-2010. (red line in graph below).