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ADP +455K, Led by Leisure & Hospitality Again

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Wednesday, March 30, 2022

Even before the month of March is fully extinguished, new private-sector payroll numbers for the month are out from Automatic Data Processing (ADP - Free Report) this morning. Results were slightly better than expected at 455K, while February’s revision grew 11K to 486K. At first blush, we see continuing strength in the U.S. labor market, at least in the private sector.

Goods-producing jobs came in at 79K, which is relatively strong, though 377K on the Services side demonstrate that our economy remains heavily weighted in service offerings. As per usual, Leisure/Hospitality was the biggest gainer in monthly private-sector gains: 161K. Second place is Education/Health Services, at less than half (though still strong): 72K. Professional and Business Services reached 61K, while Manufacturing was 54K.

Last month, we saw negative gains in small businesses, which illustrated that medium- and large-sized companies — with their improved compensation offerings in terms of healthcare coverage, stock options, etc. — but in March these rebounded: 90K new jobs were created at firms with 50 or fewer employees. Large companies — those with 500 or more employees — grew by 177K this month, while medium-sized places of work beat the field at 188K. Nice balance overall, especially compared to the previous month.

Expectations for Friday’s nonfarm payroll report from the U.S. Bureau of Labor Statistics (BLS) are for 490K new jobs having been created this month. While this would be well off the pace we saw in February of 678K new jobs, that was an accelerated pace that would be difficult to maintain under the best of circumstances. That said, the circumstances are pretty good: we’re still building back from the two-year pandemic, and the labor force continues to fill in sectors hungry for workers.

Yesterday’s JOLTS report for February showed that there were still 11.3 million job openings last month, in-line with the previous month but higher than expected. At some point, we might expect these big monthly labor force figures to take a bite out of the big maw in unfilled jobs. And Job Quits last month climbed to 4.4 million; eventually we should see these numbers come in less inflamed as the labor market settles itself at notably higher levels than we’ve seen in two years.

Pre-market futures barely budged on this ADP news — nor on the second Q4 GDP revision, which came down a tick to 6.9%, core at 6.4% — with the Dow down -110 points, the Nasdaq -90 and the S&P 500 -20 points. Traders in the early session are giving back some of their recent gains; the market is currently still positioned to post a positive trading week yet again.

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