Preview: Due September 2 - U.S. August ADP Employment - Another subdued month, this time underperforming payrolls
We expect a 50k increase in August’s ADP estimate for private sector employment, which is below our forecast for August’s private sector non-farm payroll of 75k (we also expect overall payrolls to rise by 75k). This would be the first ADP underperformance of payrolls in four months.
Weekly data from ADP for the week to August 8, the week before the monthly survey, shows a 4-week average of 11.75k, which implies a monthly pace of close to 50k. A rise of 50k would be similar to July’s ADP report, which increased by 44k, outperforming a second straight increase of 30k in private sector non-farm payrolls.
Private sector payrolls underperformed ADP data in June and July largely because of payrolls showing declines of over 40k in leisure and hospitality, which we expect to correct higher in August’s non-farm payroll. Leisure and hospitality may improve on a decline of 11k seen in July’s ADP report, but has less rebound potential than in the payroll. July’s ADP gain was led by a rise of 36k in education and health. August may see some slowing here, but we still expect it to be the strongest sector.
We expect August’s ADP report to show goods unchanged, close to the outcomes of June and July, though we expect a fourth straight increase in manufacturing, by 5k. We expect services to increase by 50k, similar to July’s 47k, but significantly slower than gains of close to 100k seen in April, May and June.
