Summary: Private sector adds jobs in June; less than expected but May numbers revised up by staggering amount; employment numbers up in firms of all sizes; services sector accounts for 85% of gains; official payroll report expected to provide similar rise.
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 June report indicated private sector employment increased by 2.369 million, less than the 3.0 million which had been expected. However, May’s change was transformed from a 2.76 million fall to a 3.065 million rise after revisions.
NAB Head of FX Strategy (FICC) Ray Attrill said the report was “largely ignored given last month’s report underestimated US non-farm payrolls by 5.6 million…”
The report was released on the same day as the ISM’s June PMI report and US Treasury yields rose modestly. By the close of business, the 2-year Treasury bond yield had gained 4bps to 0.17%, the 10-year yield had increased by 3bps to 0.68% while the 30-year yield finished 1bp higher at 1.42%.
Employment numbers were up across businesses of all sizes. Firms with less than 50 employees filled a net 0.937 million positions, mid-sized firms (50-499 employees) filled 0.559 million positions while large businesses (500 or more employees) accounted for 0.873 million additional employees.
Employment at service providers accounted for just over 80% of the total net increase. In the services sector, 1.912 million positions filled in net terms. The “Leisure & Hospitality” sector was the largest single source of gains, with 0.961 million additional positions filled. Total jobs among goods producers increased by a net 0.457 million, with construction firm gains accounting for over 85% of the sector’s expansion.