Private employers added 742,000 jobs in April, ADP said Wednesday.
That was below consensus. The market wanted at least 850,000.
The predictive power of ADP vis-à-vis the government’s monthly payrolls report has proven especially tenuous in the pandemic era, so “misses” and “beats” are taken with a grain of salt. The range of estimates, from three-dozen economists, was 525,000 to 1.125 million.
Despite the downside “miss,” April’s gain was still the largest since September and the second-largest since the mechanical rebound from the lockdown months.
Gains were almost uniformly distributed. Small employers added 235,000 jobs, mid-sized firms 230,000 and large employers 277,000.
The services sector posted a 636,000-job gain. Obviously, market participants are keen to gauge the strength of the rebound in services, which bore the brunt of the pandemic layoffs and accounts for the majority of US economic activity.
Leisure and hospitality led services sector gains with 237,000 jobs added (figure below).
The goods producing sector chipped in 106,000 positions, with manufacturing accounting for more than half.
“The labor market continues an upward trend of acceleration and growth,” Nela Richardson, ADP’s chief economist said. “Service providers have the most to gain as the economy reopens, recovers and resumes normal activities.”
Richardson went on to remind the nation that “payrolls are still more than 8 million jobs short of pre-COVID-19 levels.” Still, private sector employers have added 1.3 million jobs over the past two months, more than they aded over the previous five months combined.
Nobody was concerned about the headline miss. At the margins, it might suggest Friday’s NFP print won’t be the 1 million blockbuster some are hoping to see, but there was nothing in today’s data to change the overarching narrative. And that’s a good thing. That narrative, as you’re probably apprised, is decidedly upbeat.
Walk down any commercial main street and you will see three things: more activity, many boarded up stores, and signs in the remaining stores saying “we are hiring.” Hiring, but not necessarily fully staffed. As the data shows “jobs” are picking up but it also shows 8 mil are not yet working compared to pre-Covid levels. The irony is that because not all those pre-Covid workers are back on the job but the overall economy appears to be pretty much back to normal, the failure to put those unhappy eight million back to work will come out as “increased productivity” in the stats later in the year. Bummer … redundant I guess.