U.S. April ADP Employment - Labor market still looking healthy
April’s ADP’s estimate of private sector employment of 109k is slightly stronger than expected though not as strong as weekly ADP data had been hinting. Still, as the strongest increase since January 2025, it suggests the labor market is not weakening, suggesting Fed focus should be on inflationary risk.
The monthly gain was led by a 61k increase in education in health, a sector (largely health) that has led most recent non-farm payroll gains. Trade/transport and utilities had a strong month at 25k and construction was healthy at 10k. Elsewhere changes were small with the largest negative being a fall of 8k in professional and business. Manufacturing saw a marginal 2k increase, though in being the first increase in two years backs recent signals of improvement in the sector.
Wages saw yr/yr gains for job stayers slightly slower at 4.4% from 4.5% and job changers stable at 6.6%.
ADP data significantly underperformed payrolls in January and March with a significant outperformance in February in between. Our payroll forecast is 90k, 95k in the private sector, which would imply only a modest ADP outperformance and the smallest gap between the two series since November. However, initial claims look consistent with a respectable payroll increase.
