Summary: ADP payroll numbers show a relatively small gain in July; much less than expected; June numbers revised up, double previous estimate of gain; employment figures up in small and large firms, down in mid-sized firms; services sector accounts for almost all gains; wide range of estimates in upcoming official non-farm payroll report.
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 July report indicated private sector employment increased by just 0.167 million, much less than the 1.635 million which had been expected. However, June’s increase was also more than doubled from 2.369 million to 4.8 million rise after revisions.
NAB currency strategist Rodrigo Catril noted “this indicator severely undershot the more closely watched non-farm payrolls indicator over the past couple of months, by some 5.9 million in May and 2.4 million in June.”
US Treasury yields rose moderately. By the close of business, the 2-year Treasury bond yield had gained 3bps to 0.12% while 10-year and 30-year yields each finished 4bps higher at 0.55% and 1.23% respectively.
Employment numbers in net terms were up except in mid-sized businesses. Firms with less than 50 employees filled a net 63,000 positions, mid-sized firms (50-499 employees) lost 25,000 positions while large businesses (500 or more employees) accounted for 129,000 additional employees.
Employment at service providers accounted for almost all of the total net increase. In the services sector, 166,000 positions filled in net terms. The “Professional & Business” sector was the largest single source of gains, with 58,000 additional positions filled while the “Education & Health” and “Trade, Transportation & Utilities” sectors accounted for 46,000 and 41,000 positions respectively. Total jobs among goods producers increased by only a net 1,000, with modest gains in the manufacturing sector offset by losses in construction, mining and natural resources firms.