ADP private payrolls rose 38,000 in August, missing forecasts

ADP private payrolls in August increased by 38,000, following an upwardly revised 46,000 gain in July, according to the payroll processor’s monthly report. The result fell 9,000 short of the 47,000 Dow Jones consensus cited by CNBC and 10,000 below the 48,000 forecast in Reuters’ economist poll, adding to evidence of slower hiring across much of the private sector.

The August increase was the smallest since January, CNBC and UPI reported. It also concealed a narrow base of hiring: education and health services added 45,000 jobs, more than the overall net gain, as job losses elsewhere offset part of that increase.

Leisure and hospitality added 16,000 positions and construction added 12,000, Reuters reported. Financial activities gained 6,000 jobs. Manufacturing shed 17,000 positions, the largest sector decline, while professional and business services cut 16,000. Reuters also reported losses in trade, transportation and utilities, information, and natural resources and mining.

Which employers drove ADP’s August payroll growth?

Large companies accounted for most of the net increase. Businesses with at least 500 employees added 34,000 jobs, CNBC reported. Employers with fewer than 50 workers added 3,000 on net. Within that smaller-company group, firms employing 1 to 19 people added 20,000 jobs, while those with 20 to 49 employees cut 17,000, according to UPI.

ADP’s pay data showed no change in the pace of annual gains for workers who remained with their employer. Base pay for those job-stayers rose 3.0% from a year earlier and gross pay, which includes items such as tips, commissions and bonuses, rose 4.4%, CNBC reported. Across all workers, base pay rose 3.2% and gross pay increased 4.7%.

How does the ADP report differ from the official jobs report?

ADP measures employment at private companies, while the Bureau of Labor Statistics’ monthly nonfarm-payroll report covers both private and public-sector employment. The BLS release also includes the official unemployment-rate estimate, which is based on a household survey. Readers can see how the US unemployment rate is calculated in Treasury’s explainer.

The ADP report, jointly developed with the Stanford Digital Economy Lab, was released before the BLS August employment report due Friday. Reuters cautioned that ADP has been a poor guide to the government’s estimate of private payrolls, so the two releases should not be treated as interchangeable.

Forecasts for the government report differed by survey. CNBC cited expectations for a 53,000 increase in total nonfarm payrolls after July’s 23,000 decline, while Reuters cited a 56,000 increase. Both reports said economists expected the unemployment rate to hold at 4.1%.

This story draws on original reporting from CNBC.