ADP Says Private Sector Added 139K Jobs In Frigid February

Mar 5 2014, 9:20am CST | by

ADP’s February National Employment report out Wednesday shows private payroll adding 139,000 jobs last month. The results came in below the 160,000 economists expected. ADP also revised its January figure down from 175,000 to 127,000 jobs added.

Carlos Rodriguez, CEO of ADP, pointed out in a statement that the figure is well below the 12 month average which is over 180,000. Mark Zandi, chief economist of Moody’s Analytics, which collaborates with the payroll company on the monthly report, agreed,”February was another soft month for the job market. Employment was weak across a number of industries. Bad winter weather, especially in mid-month, weighed on payrolls. Job growth is expected to improve with warmer temperatures.”

The downward revision to the January private payroll additions bring the ADP figure closer to the 113,000 jobs the Bureau of Labor and Statistics showed the economy adding last month. However, there is often a divide between the ADP and BLS numbers due to methodological differences. ADP counts anyone on a payroll as employed whether they actually worked that month or not, while BLS only counts people who have been paid for at least one day of work.

As a result, explains High Frequency Economics Chief U.S. Economist Jim O’Sullivan in a note on the figures, “ADP is usually less sensitive to atypical weather than the BLS payrolls series, so if anything the data raise the risk of an even weaker number on Friday.” The sometimes extreme differences — ADP now says the economy added 191,000 jobs in snowy December, BLS says it added 75,000 — cause some to question the usefulness of ADP’s numbers as a predictive measure.

Beyond weather, O’Sullivan writes, “there are plenty of other sources of volatility. ADP overestimated the initially reported rise in private payrolls in the BLS report by 33K last month following an unusually large 151K miss in December. The median miss, without regard to sign, has been 40K in the 16 months since Moody's became the compiler of the data. That is better than the 62K median miss in the prior 16 months but it is no better than the 39K median consensus miss during that period.” However, he says, the fact that February came in below economists’ consensus estimate for ADP suggests that BLS data — coming out Friday — could come in below the 150,000 jobs added expectation.

By company size, ADP showed businesses with one to 49 employees adding the most jobs in February at 59,000. Medium sized businesses with 50 to 499 employees added 35,000 and large businesses with 500 to over 1,000 employees added 44,000 jobs with most of the gains coming from the largest employers.

Industries adding jobs included business services at 33,000, trade/transportation/utilities at 31,000 and construction at 14,000. In addition to the gains in construction were manufacturing added 1,000 jobs, an improvement from 7,000 lost there last month, bringing the goods-producing business total to 19,000 jobs added. Service-providing businesses far out-hired goods-producing business with 120,000 jobs added, despite a loss of 2,000 jobs financial activities. Both sectors were up from the revised prior month figures.

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Source: Forbes Business


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