U.S. March ADP Employment - Above recent trend, consistent with payroll forecast
ADP’s March ADP estimate for private sector employment growth of 184k is on the high side of expectations and recent trend and close to our near consensus forecast for private sector payrolls of 180k (we expect overall payrolls to rise by 230k). It is the strongest ADP outcome since July.
ADP data has underperformed non-farm payrolls in the last four months and six of the last seven, after sharply outperforming in June and July. It is unclear whether this moderate ADP acceleration is a catch up with payrolls or signaling an acceleration in payrolls. We feel the former is more likely.
In addition to acceleration in job growth, ADP reported a sharp acceleration in wages for job changers, to 10.0% yr/yr from 7.6%, though wages for job stayers remained unchanged at 5.1% yr/yr.
The ADP acceleration in jobs is largely due to leisure and hospitality seeing a strong 63k increase, though there was also strength in construction at 33k and trade, transport and utilities at 29k. Education and heath, which has been consistently the strongest component in most recent non-farm payroll releases, was up a modest 17k. March’s payroll may look similar to the ADP data in its headline, but we doubt it will in the detail.
