Summary: ADP payroll numbers increase in October; half of the consensus figure; September number revised up a touch; report “points to slowing employment growth”; figures up across firms of all sizes; services sector accounts for 95% 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 October report indicated private sector employment increased by 0.365 million, half the 0.738 million which had been generally expected. September’s increase was revised up by 2,000 to 753,000.
NAB Head of FX Strategy within its FICC division Ray Attrill said the report “points to slowing employment growth.”
US Treasury yields fell by increasing amounts along the curve but this may have been more a function of uncertainty surrounding the US presidential election than the ADP report. By the close of business, the 2-year Treasury bond yield had lost 2bps to 0.14%, the 10-year yield had dropped 9bps to 0.77% while the 30-year yield finished 8bps lower at 1.54%.
Employment numbers in net terms increased almost evenly across businesses of all sizes. Firms with less than 50 employees filled a net 114,000 positions, mid-sized firms (50-499 employees) gained 135,000 positions while large businesses (500 or more employees) accounted for 116,000 additional employees.
Employment at service providers accounted for around 95% of the total net increase, or 348,000 positions. The “Leisure & Hospitality” sector was the largest single source of gains, with 125,000 additional positions filled while the “Education & Health” and “Professional & Business” sectors accounted for around 79,000 and 60,000 positions respectively. Total jobs among goods producers increased by a net 17,000.
Prior to the ADP report, the consensus estimate of the change in October’s non-farm employment figure was 0.610 million. The non-farm payroll report will be released by the Bureau of Labor Statistics this coming Friday night (AEST), 6 November 2020.