Summary: ADP payroll numbers jump in September; almost double consensus figure; August numbers revised up; strength of increase bolsters expectations of “reasonable” growth in upcoming non-farm payrolls (NFP) report; figures up across firms of all sizes; services sector accounts for 75% of gains; increase consistent with non-farm payroll expectations.
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 September report indicated private sector employment increased by 0.749 million, higher than the 0.65 million which had been generally expected. August’s increase was revised up from 428,000 to 481,000.
“Although it has been poorly correlated with the NFP data recently, the strength of ADP jobs growth will bolster expectations of reasonable jobs growth in the September non-farm payrolls report, albeit down from the +1.4 million reported last month,” said ANZ economist Adelaide Timbrell.
US Treasury yields rose by increasing amounts along the curve. By the close of business, the 2-year Treasury bond yield had inched up 1bp to 0.15%, the 10-year yield had added 3bps to 0.68% while the 30-year yield finished 4bps higher at 1.45%.
Employment numbers in net terms increased across businesses of all sizes. Firms with less than 50 employees filled a net 192,000 positions, mid-sized firms (50-499 employees) gained 259,000 positions while large businesses (500 or more employees) accounted for 297,000 additional employees.
Employment at service providers accounted for around 75% of the total net increase, or 552,000 positions in net terms. The “Trade, Transportation & Utilities” sector was the largest single source of gains, with 186,000 additional positions filled while the “Education & Health” and “Leisure & Hospitality” sectors each accounted for around 90,000 positions. Total jobs among goods producers increased by a net 196,000, with a 130,000 increase in the manufacturing sector providing a substantial majority of the gain.