U.S. May ADP Employment - Trend picking up
May’s ADP’s estimate of private sector employment of 122k is in line with market exactions if not quite as strong as weekly ADP data for the preceding week had been implying. Still, it maintains a recent improvement in trend and like last week’s was, is the strongest increase since January 2025.
April’s gain was revised down marginally to 105k from 109k and is now 18k below April’s private sector non-farm payroll gain of 123k. Our forecast for May’s private sector non-farm payroll gain is 90k, which would mean an ADP outperformance of 32k, which would be far from unusual. We see overall payrolls at 85k.
Still, the ADP data, like the April job openings data released yesterday, and still low initial claims, suggests some upside risk to our payroll call. The labor market still looks healthy suggesting Fed concerns should be focused on inflation.
The monthly gain was led by a 57k increase in education in health, a sector (largely health) that has led most recent non-farm payroll gains. Trade/transport and utilities had a second straight strong month at 36k. Most other sectors saw modest gains though there were negatives from information at -9k, possibly due to adoption of AI, and natural resources and mining at -3k, not yet showing a response to high energy prices, perhaps due to uncertainty over how long they will persist.
Wages saw yr/yr gains for job stayers stable at 4.4% from 4.5% while job changers saw a slowing to 6.5% from 6.6%.
