U.S. ADP Private Payroll Increase Strengthens

The ADP National Employment Report indicated that private nonfarm payrolls increased 202,000 (1.5% y/y) during December following a 124,000 November rise, revised from 67,000. It was the largest increase since April and exceeded expectations for a 150,000 gain in the Action Economics Forecast Survey. During the last three months, payrolls rose an average 159,000 per month, compared to a high of 260,000 in July of last year.

The increase in small payrolls improved last month to 69,000 (0.7% y/y) following an upwardly revised 36,000 November gain. The average three-month rise of 41,000 was the best in nine months. Medium-sized payrolls rose an increased 88,000 (1.9% y/y) and the three-month average gain of 74,000 also was the firmest since the spring. It remained below, however, the 113,300 average as of February. Large-sized payrolls increased 45,000 (2.3% y/y). Gains have been fairly steady for three months, but roughly half earlier increases.

Within industry sectors, employment at goods-producing firms rose 29,000 (0.9% y/y) last month after a 2,000 November gain, revised from -18,000. It was the first meaningful rise since April. Construction sector payrolls strengthened 37,000 last month (2.3% y/y) following seven months of lethargy. Factory sector employment continued to fall by 7,000 last month (+0.3% y/y), in line with the average monthly decline since early last year. Employment in the natural resource & mining sector eased 1,000 (-3.5% y/y) and has been falling since March.

Employment growth in the private service sector strengthened to 173,000 (1.7% y/y) after a 122,000 November rise, revised from 85,000. Average three-month growth of 150,300 contrasts to 196,000 as of July 2018. Trade, transportation & utilities payrolls surged 78,000 (0.9% y/y) after an 8,000 November decline. Education & health service sector payrolls strengthened 49,000 (2.4% y/y). Professional & business sector jobs increased a greatly improved 61,000 (2.1% y/y). Payrolls in finance increased a fairly steady 10,000 (1.4% y/y). The number of leisure & hospitality jobs declined 21,000 (+1.7% y/y). Three-month growth fell sharply to 11,000, down from 42,000 in January. Information sector payrolls declined 14,000 (-0.6% y/y) following two months of minimal increase.

The Automatic Data Processing Research Institute survey is based on ADP's business payroll transaction system covering 411,000 companies and nearly 24 million employees. The data are processed by Moody's Analytics Inc., then calibrated and aligned with the BLS establishment survey data. The ADP data cover private sector employment only.

The ADP National Employment Report data can be found in Haver's USECON database. Historical figures date back to 2001 for private employment and the industry breakdown, and 2005 for the business size breakout. The expectation figure is available in Haver's AS1REPNA database.