Preview: Due March 6 - U.S. February ADP Employment - Following two straight sharp underperformances of payrolls
We expect a 140k increase in February’s ADP estimate for private sector employment growth, which would be on the high side of a recent quite subdued range, but still a marginal underperformance of our 160k forecast for private sector non-farm payrolls (we expect overall payrolls to rise by 200k).
The last six months have seen ADP gain by between 104k and 158k, that marking quite a sharp slowing from where trend was before August. Underperformances of the non-farm payroll was quite modest from August through November, but the last two months have seen payrolls outperforming sharply, particularly so in January when ADP saw a rise of only 107k while private non-farm payrolls surged by 317k.
We expect a narrowing of the gap this month to come more from payrolls than the ADP series, with ADP running on quite a stable trend and January payrolls possibly flattered by supportive seasonal adjustments.
Initial claims were a little higher in February than January, if still consistent with a tight labor market. We expect February’s ADP improvement to be led by services, which slipped below trend in January.
