It's the Economy

March ADP Surprised

March ADP Payroll Report was expected to surprise to the upside. It was a surprise. Still saw March to March growth for all sectors,

The ADP Private Sector Payroll Report gives us a first insight into the jobs market. It is normally released two days prior to the federal Employment Situation Report. The ADP Payroll Report is comprised entirely of seasonally  adjusted data and does not include Government Jobs. The headline Non-farm Payroll worker number measures private sector and government worker growth. It was projected that the annual growth would exceed 2.10% and that the month to month growth would be roughly 0.15% to 0.17%. It was thought that prior to the revisions to last month’s data that we would add between 207,000 and 252,000 workers, or roughly 229,000 private sector workers. What was reported?

The headline number was 129,000 payroll positions added, far short of expectations.  The data for January and February were revised. The January revision was from 300,000 positions to 264,000. This would have been the first 300,000 payroll number in over a decade. The advance January value was 213,000, so this is still a strong number. The February ADP number was 183,000 and is now 197,000. The net change was a -22,000 positions. The total revisions are still up by 29,000 positions.

The annual payroll growth came in at 2.01%, higher than March 2017 and March 2018, and slower than February 2019.

The Annual Growth rate was  reported at 2.01%.  The annual growth rate was 2.10%. during February and 1.81% during March 2018, There are a couple of ways to look at the data. We may have seen peak growth this past Fall. We are growing faster than we were last year at this time. We have been growing at over 2% since July of 2018. All would be valid.

All sectors were expected to report payroll growth, based on the annual growth data. All sectors did grow March to March. The largest gains March to March were in Natural Resources (N/R) Construction, Professional Business Services (PBS,) Leisure and Hospitality (LAH,) and Education Health Services (EHS.)

Month to month growth dropped dramatically from the January and February levels. It was the lowest level of month to month growth since September of 2017.

The month to month growth rate stumbled to its lowest level since September of 2017. The month to month growth rate has been consistent during the Month of March at roughly 0.17%. This data does not make sense. We are growing year over year faster than we were last March. The seasonally adjusted growth for Construction, Manufacturing, and Financial services were negative when they were expected to be positive. Three of the fastest growing sectors during March have been Natural Resources, Manufacturing, and Construction. The construction data has shown improvement after the end of the Government Shutdown.  All sectors were expected to grow month to month. Watch next month’s revisions.

The growth in Leisure and Hospitality, Education and Health Services, and Trade, Transportation and Utilities (TTU,) may impact the average wage growth reported this Friday. LAH, EHS, and TTU are three of the four lowest paid sectors. If they grew and three of the higher paid sectors declined (Manufacturing, Construction, and Financial Services decline this month, then the seasonally adjusted wage growth may be further negatively impacted. This is why this column only uses non-seasonally adjusted to calculate wage growth. Remember that it is not great to compare seasonally adjusted data to seasonally adjusted data from the same data set nonetheless different data sets.

This column has written numerous articles regarding the January revisions to the government data and the February revisions to the ADP data. Was the ADP data revised lower to better match the disappointing SA CES data reported from the government? Will the government CES data be revised higher to better match the ADP data? We will know more this Friday. The economy is doing better than it was during March 2018.

It’s the Economy.

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