Summary: ADP payroll numbers increase in April; less than consensus figure; March increase revised up; point to “significant acceleration” in US jobs market; led by leisure/hospitality sector; figures up across firms of all sizes; gain predominantly in services sector.
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 742,000 in April, less than the 900,000 which had been generally expected. March’s increase was revised up by 48,000 to 565,000.
“While markets focussed on the miss, the data point to a significant acceleration in the jobs market from March,” said ANZ economist John Bromhead.
Long-term US Treasury yields declined on the day. By the close of business, 10-year and 30-year Treasury bond yields had each lost 2bps to 1.57% and 2.25% respectively. The 2-year yield remained unchanged at 0.16%.
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 May 2022 implied an effective federal funds rate of 0.105%, about 4bps above the current spot rate.
Employment numbers in net terms increased across businesses of all sizes, with gains fairly evenly distributed for a second consecutive month. Firms with less than 50 employees filled a net 235,000 positions, mid-sized firms (50-499 employees) gained 230,000 positions while large businesses (500 or more employees) accounted for 277,000 additional employees.
Employment at service providers accounted for about 85% of the total net increase, or 636,000 positions. The “Leisure & Hospitality” sector was the largest single source of gains, with 237,000 additional positions filled while the “Trade, Transportation & Utilities” sector accounted for 155,000 positions. Total jobs among goods producers increased by a net 106,000.