U.S. April ADP Employment - Trend looking stronger, payroll implications unclear
ADP’s April estimate for private sector employment growth of 192k is on the high side of expectations though not quite as strong as the revised March gain of 208k (revised from 184k). ADP trend has picked up in the last three months but this may be catch up with strength in non-farm payrolls.
ADP data has underperformed non-farm payrolls in the last five months and seven of the last eight, after sharply outperforming in June and July of 2023. We feel it is more likely that ADP data is catching up with payrolls rather than signaling a further acceleration in payrolls. Our private sector non-farm payroll call is 195k, almost identical to the ADP outcome. We expect overall payrolls including government to rise by 255k.
ADP data continue to show leisure and hospitality as the strongest sector, rising by 56k, but there was also a substantial gains in construction at 35k and few components showing significant weakness. There were 26k gains in education/health and trade/transport/utilities. The former is weaker than how the sector has been trending in the non-farm payroll detail.
Wage data showed job starts up by 5.0% yr/yr versus 5.1% in both February and March. Job changers at 9.3% were down from 10.1% in March but up from 7.6% in February, so wage pressures have not gone away.