Inside the ADP Report – Outstanding job growth in February
Bottom Line: We had a stunning start to 2020 with 291,000 private sector jobs added in January – the biggest gain in five years. The positive vibes continued in the economy and the financial markets until late February. When the coronavirus outbreak turned the expanding world economy on its head. The Chinese manufacturing index for February was the worst on record as much of the country was/is on lockdown. In the United States our manufacturing index remained positive – barely, but it was the weakest in years. It’ll take some time to see what the real economic impact is from all of this but the jobs numbers are the ones I’m most closely watching in the here and now. If companies are still doing more hiring than firing – we'll be alright. If it goes the other way... It’d be time to talk about the “R” word. What happened with private sector jobs in February...? The news was about as good as we could have hoped for with 183,000 private sector jobs being added. A strong number in any month at this point in the economic cycle – let alone with the coronavirus concerns. As for where the jobs were added...
- Small businesses: +24,000
- Medium sized businesses: +26,000
- Large businesses: +133,000
This is where the news is a little less rosy, though still generally encouraging. The smaller the company, the greater the read into the real-time economy we receive. The bottom line is that small businesses are only hiring when they have a need to do so based growth in their business. 24k small business jobs along with a similar number isn’t strong. But it is still positive. The surprise in these numbers certainly came with the growth in large company hiring. This is a blowout number and it comes at a time in which American multi-national companies are the first to feel the negative impact of the virus disruptions overseas. Could this be a result of more companies ramping up hiring in the US for the purposes of producing more here rather than Asia?
As for the industries adding the most...
- #1 Education and healthcare
- #2 Leisure & Hospitality
- #3 Professional and business services
Construction jobs also surged but we did see a bit of a dip in manufacturing jobs. That’s a category I’ll be closely watching in future months. Friday we’ll receive the government report and will be able to put all of the pieces together. There’s a reason for optimism today that was unexpected previously.