Summary: ADP payroll numbers increase in November; less than consensus figure; October number revised up by 39,000; report “probably not enough to meaningfully alter expectations” for upcoming non-farm payroll report; figures up across firms of all sizes; services sector accounts for 90% of gains.
The ADP National Employment Report is a monthly report which provides an estimate of US non-farm employment in the private sector. Since the report began to be published 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 ADP November report indicated private sector employment increased by 0.307 million, less than the 0.5 million which had been generally expected. However, October’s increase was revised up by 39,000 to 404,000.
A month ago, NAB Head of FX Strategy within its FICC division Ray Attrill said the October ADP report had pointed “to slowing employment growth.” After this latest report, he said the figures were “probably not enough to meaningfully alter consensus expectations” for the upcoming non-farm payrolls report even though the ADP figures were noticeably lower than consensus forecasts.
US Treasury yields were largely unchanged by the end of the day, although ultra-long yields rose modestly. By the close of business, 2-year and 10-year Treasury bond yields remained unchanged at 0.17% and 0.93% respectively while the 30-year yield finished 2bps higher at 1.69%.
Employment numbers in net terms increased across businesses of all sizes, although small and medium-sized firms were the main drivers of the month’s gain. Firms with less than 50 employees filled a net 110,000 positions, mid-sized firms (50-499 employees) gained 139,000 positions while large businesses (500 or more employees) accounted for 58,000 additional employees.
Employment at service providers accounted for around 90% of the total net increase, or 276,000 positions. The “Leisure & Hospitality” sector was the largest single source of gains, with 95,000 additional positions filled while the “Education & Health” and “Professional & Business” sectors accounted for around 69,000 and 55,000 positions respectively. Total jobs among goods producers increased by a net 31,000.
Prior to the ADP report, the consensus estimate of the change in October’s non-farm employment figure was 0.5 million. The non-farm payroll report will be released by the Bureau of Labor Statistics this coming Friday night (AEST), 4 December 2020.