Summary: ADP payroll numbers increase in March; slightly more than consensus figure; February increase revised up; led by leisure/hospitality sector as restrictions eased; figures up across firms of all sizes; gains in both goods and services sectors.
The ADP National Employment Report is a monthly report which provides an estimate of US non-farm employment in the private sector. Since publishing of the report began in 2006, its employment figures have exhibited a high correlation with official non-farm payroll figures, although a large difference can arise in any individual month.
The latest ADP report indicated private sector employment increased by 517,000 in March, slightly more than the 500,000 which had been generally expected. February’s increase was revised up by 59,000 to 176,000.
“The rise in employment was led by leisure and hospitality, possibly reflecting that many states in the US have been relaxing COVID restrictions,” said ANZ economist Daniel Been.
US Treasury yields moved almost-uniformly higher across the curve on the day. By the close of business, 2-year and 10-year Treasury bond yields had each gained 2bps to 0.16% and 1.74% respectively while the 30-year yield finished 3bps higher at 2.41%.
In terms of US Fed policy, expectations of any change in the federal funds rate over the next 12 months remained soft. Federal funds futures contracts for March 2022 implied an effective federal funds rate of 0.10%, just 3bps above the current spot rate.
Employment numbers in net terms increased across businesses of all sizes, with gains fairly evenly distributed. Firms with less than 50 employees filled a net 174,000 positions, mid-sized firms (50-499 employees) gained 188,000 positions while large businesses (500 or more employees) accounted for 155,000 additional employees.