Despite the exuberance of US equity markets and sentiment indicators, ADP reports small businesses cut jobs (-3k) in December (as large businesses added) leaving ADP at 153k (considerably below the 175k expectation). Once again goods producing jobs declined (despite soft survey data from ISM/PMI that everything is awesome) as services improved. Additionally, manufacturing jobs continued to slide, down by 9,000 in December, while construction and mining jobs also declined by 2,000 and 5,000 respectively.
As this was the 2nd lowest print for ADP since May, Mark Zandi - no longer beholden to a Democratic administration in which he desperately want a political seat - has suddenly become a doomsayer: "As we enter 2017, the tightening labor market will likely slow the growth.”
“As we exit 2016, it’s interesting to note that the private sector generated an average of 174,000 jobs per month, down from 209,000 in 2015,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “And while job gains in December were slightly below our monthly average, the U.S. labor market has experienced unprecedented seven years of growth that has brought us to near full employment. As we enter 2017, the tightening labor market will likely slow the growth.”
Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth remains strong but is slowing. The gap between employment growth in the service economy and losses on the goods side persists. Smaller companies are struggling to maintain payrolls while large companies are expanding at a healthy pace.”
Change in Nonfarm Private Employment
Change in Total Nonfarm Private Employment
Change in Total Nonfarm Private Employment by Company Size
The details from the report: