ADP Employment Data Signals No Covid-19 Effects… Yet

Following January’s unexpected explosion higher in employment, ADP job growth was expected to slow in February.

The five-year high +291k print in January (dominated by Service economy job gains) was dramatically downwardly revised to just +209k (), which helped create a modest beat in February: +183k vs +170k exp.

Source: Bloomberg

January’s original (Goods +54k, Services +237k) was drastically revised down (Goods +22k, Services +186k) and February saw growth slow further (Goods +11k, Services +172k)

Source: Bloomberg

“The labor market remains firm, as private-sector payrolls continued to expand in February,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

“Job creation remained heavily concentrated in large companies, which continue to be the strongest performer.”

Under the hood, it was a mixed bag with Natural resources/mining and Manufacturing shedding jobs as Education and Leisure/Hospitality saw the biggest gains:

Mark Zandi, chief economist of Moody’s Analytics, said, “COVID-19 will need to break through the job market firewall if it is to do significant damage to the economy. The firewall has some cracks, but judging by the February employment gain it should be strong enough to weather most scenarios.”