US ADP sees a below 200k print for the first time since January 2014 – KBC

FXStreet (Barcelona) - Reviewing the US ADP payrolls report, the KBC Bank Research Team views that the below 200k print suggests the labour market recovery might have slowed down in response to weaker growth, but also note that the report is not necessarily a clear indicator for the NFP.

Key Quotes

“According to the ADP employment report, US private sector hiring slowed unexpectedly in March, to its weakest pace since January last year. The ADP report showed an increase in private sector employment by 189 000 in March, down from 214 000 in February and below the market consensus of 225 000.”

“Details by company size show that hiring among small (108 000 from 103 000) and medium‐sized (62 000 from 57 000) firms remained on track, but slowed sharply at large firms (19 000 from 53 000).”

“Looking at the sector details, weakness was mainly based in goods‐producing as hiring slowed to 5 000 from 22 000 in February. The construction industry added 17 000 new workers in March, but the manufacturing sector lost 1 000 jobs. The mining sector probably laid off workers too.”

“In the services sector, hiring slowed only marginally in March, to 184 000 from 192 000 in February. Hiring accelerated in the cyclical business services sector (40 000 from 34 000), but slowed somewhat in trade, transportation and utilities (25 000 from 32 000) and in the financial sector (16 000 from 19 000).”

“For the first time since January last year, the US private sector added less than 200 000 new jobs, suggesting that the labour market recovery has slowed in response to weaker growth.”

“Nevertheless, the ADP report is usually not accurate in forecasting job growth among larger firms and therefore we are cautious to draw conclusions for Friday’s payrolls report.”