(ADP) ADP Employment Survey Sees 91K Private Jobs Added

The Automatic Data Processing (ADP) employment survey was stronger than expected in September. It shows that private sector employment rose by 91,000, above consensus expectations for a 48,000 increase. The August numbers were revised down slightly to a gain of 89,000 jobs from the initial report of a 91,000 gain.

On average, the ADP report does a fairly good job of predicting the private sector totals that the BLS will report on Friday, although in any given month it can be off substantially. It is prone to fairly large errors in both directions. Last month it was far too optimistic — the BLS private sector job gains were just 17,000.

If confirmed by the BLS on Friday it would indicate that the economy continues to wallow along in a pseudo recovery, growing, but not growing fast enough for anybody to really feel like it is growing.  However, it would not indicate a renewed downturn. Certainly the vast army of the unemployed will not feel like things are getting better.

It’s not a great report, but after the soft data we have been seeing for most of August and September, it is a relief that it is not much worse.

Over time, the ADP numbers do tend to align with the BLS numbers. There can, however, be substantial differences between the two reports on a month to month basis.

As the chart below shows, the ADP (blue) numbers track the BLS (red) numbers pretty well over time, but the BLS numbers tend to be somewhat more volatile month to month. Also note that in terms of private sector employment, this recovery has been stronger than the last recovery was up until this point, regardless of which number you used.

Small businesses, defined as those with fewer than 50 employees, rose a total of 60,000 jobs in the month. Medium sized firms — those with between 50 and 499 employees — gained 36,000 jobs, while large firms — with 500 or more employees — actually lost 5,000 jobs.

Large businesses are a relatively small share of total employment in the country, accounting for just 17.460 million out of a total of 108.936 million private-sector jobs in the country (16.0%). Small business is the largest source of employment at 49.382 (45.3%) million, followed by medium businesses at 42.099 million (38.6%).

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