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First Cut: December has large gain in private payrolls in ADP National Employment Report

The ADP National Employment Report said private payrolls were up 202,000. Service providers added 173,000 jobs with large increased in trade, transportation, and utilities (up 78,000), professional and business services (up 61,000), and healthcare (46,000). Gains among goods producers up 29,000 which was entirely due to a hefty rise for construction (up 37,000) that was partially offset by mining (down 1,000) and manufacturing (down 7,000).

The December increase was above even the high end of expectations. However, last month’s mismatch between the BLS data and the initial ADP report will make forecasters wary of using the strong number as a guide for the upcoming government report at 8:30 ET on Friday. The so-called whisper number is likely to reflect the potential for an upside surprise, but most forecasters probably won’t alter their current estimates.

There were substantial upward revisions to the prior two months. In particular, the massive miss in November from the originally reported up 67,000 was revised to nearly double the size at up 124,000.

In any case, the report indicates that hiring is along the lines that would be expected. Service sector businesses have reported continued modest-to-moderate hiring on fairly steady — if middling — expansion, while manufacturers have largely ceased adding to payrolls unless there is a good match on skills and experience, and are more likely doing some judicious cuts in payrolls. The demand for new housing means that some of those manufacturing workers will roll over to construction jobs where hands are needed.

 

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