Inside the ADP Report...November's jobs progress was...just ok but for potentially good reasons.
Bottom Line: Expectations for private sector jobs growth in November wasn't especially high to begin with, 185,000, so with 190,000 jobs being added - it technically was a small positive surprise. It's really just a mediocre number though. We added 226,000 private sector jobs in November of 2016 and with the exceedingly positive economic news of late - fewer than 200,000 new jobs isn't consistent with an economy growing north of 3%. We'll receive the government report on Friday, which will provide a view of public sector employment, so there's room for potentially seeing some upside to this number. Aside from the total number of jobs added the internals were also mediocre as well.
Here's the breakout of jobs added by company size:
- Small: +50,000
- Medium: +99,000
- Large: +41,000
The mid-size growth is a strong number but the small business growth is just ok and the large company growth is a bit soft given the last minute ramp up of seasonal employees for the holiday shopping season we typically see. We'd averaged 210,000 private sector jobs through October, despite the impact of the hurricanes, which has been impressive. But here's the caveat...Moody's Analytics CEO Mark Zandi, who works with ADP on the report said the labor market is "red-hot". How with just a mediocre number? We could be seeing companies not finding the employees they're looking for as the competition over talent grows with the shrinking pool of unemployed people. Which is good for wages and employees.
If we want to finish 2017 with a third consecutive quarter of 3%+ economic growth we'll likely need to do better than this in December. One exceedingly optimistic note in this report was once again manufacturing. 40,000 manufacturing jobs were added during the month - 3rd best of any industry and the best month of the year (and I believe in over a decade).