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ADP 202K December Jobs, November Revisions Double

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Wednesday, January 8, 2020

The first of the big employment numbers expected this week has come out this Wednesday morning: Automatic Data Processing (ADP - Free Report) puts together a monthly survey of private-sector payrolls, and the numbers for December were much better than expected: 202K new private-sector jobs created in the month was far beyond the consensus 150K analysts were looking for.

Even better, November’s paltry 67K initially reported literally doubled in the revision to 124K. This helps bring that month’s total closer to the extraordinary 266K reported by the U.S. Bureau of Labor Statistics (BLS) two days after last month’s ADP report. As we’ve seen historically, both ADP and BLS numbers tend to trend together month over month, given enough time for revisions.

The breakdown between Goods and Services stayed around 17% and 83% for the private-sector U.S. economy, respectively — 29K for Goods and 173K in Services. Medium-sized companies (between 50-499 employees) took the largest share of new jobs created last month: 88K. This was followed by small businesses having created 66K and large firms 45K.

The biggest swing from month to month by industry was one that went to the downside: Leisure/Hospitality, one of the top job producers over the past couple years, lost 21K jobs last month, following growth of 18K originally reported for November. The biggest upswing came in Construction, which followed a weak -5600 jobs in November with a gain of 37K in December. It was also the largest gain in construction jobs since April of last year. Just from these couple examples alone, we can see the volatile nature of industry-specific jobs creation sequentially.

Tomorrow we’ll see weekly Initial Jobless Claims, which have recovered back to the historically good range after a few weeks of amplified claims. Four-week moving averages are starting to creep northward a bit, but we have a long way to go in order to reconsider our long-term robust U.S. labor market.

Friday, then, brings us the new BLS numbers, which had been expected to come in about 100K light of November’s incredibly high 266K prior to this morning’s ADP figures. They may now be subject to some late-edition revisions to the upside, if analysts believe the jobs market will remain at historically robust levels. Last month, the Unemployment Rate fell to 3.5%, matching a half-century low, and this is expected to remain constant.

A strong week of employment numbers should go a long way in recalibrating investor worries who began the week unsure about the sudden U.S. conflict with the country of Iran. Fears of ground wars and spiking oil prices can indeed be salved by strong labor market reports, especially if tempers cool in the Middle East, near term.

Mark Vickery
Senior Editor

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