March 6, 2024

As shown above the ADP survey shows a respectable correlation with the private sector portion of the payroll employment data to be released a couple of days later.  And well it should.  ADP, or Automatic Data Processing, Inc. is a provider of payroll-related services. Currently, ADP processes over 500,000 payrolls, for approximately 430,000 separate business entities, covering over 23 million employees.  The survey has been in existence since January 2001, and its average error in the past couple of years has been 102 thousand.

The ADP report showed a jobs gain of 140 thousand in February after climbing 111 thousand in January.

.Nela Richardson, the Chief Economist for ADP said,  “Job gains remain solid. Pay gains are trending lower but are still above inflation.  In short, the labor market is dynamic, but doesn’t tip the scales in terms of a Fed rate decision this year.”

Payroll employment was surprisingly robust in December and January with gains of 333 thousand and 353 thousand, respectively.  It is likely that those two figures will get revised downward somewhat..   Any way one slices it the labor market is still very tight and firms are finding it difficult to find qualified workers. .

Given the ADP report, we are looking for payroll employment to rise by 160 thousand in February  We will get that report from the BLS on Friday.  We also expect the unemployment rate to be unchanged at 3.7%.

Stephen Slifer

NumberNomics

Charleston, SC