Tag: ADP Employment Report

ADP: Manufacturing Employment Growth Has Been Soft in 2014; Up by 1,000 in April

Automatic Data Processing (ADP) said that manufacturing employment increased by 1,000 workers in April. This was the third straight month of positive employment growth for manufacturers, and yet, it was also clear that hiring was well below the pace experienced at the end of last year. Manufacturers added an average of 13,000 workers per month from August to December 2013, but the sector has lost 1,000 workers on net in total from January to April 2014. With rebounding levels of production in recent manufacturing data following the weather-related slowdowns earlier in the year, we anticipate hiring to pick up in the coming months.

Meanwhile, the nonfarm private sector workforce grew by 220,000 in April, up from 209,000 in March. This was a sign that overall labor market has begun to move beyond the weaknesses seen around January, when nonfarm employment rose just 121,000. To put these figures in perspective, the average monthly job growth in 2013 was 187,000, with an average of 204,000 in the second half of the year. As such, this report suggests an acceleration in employment growth nationally.

In April, the largest job gains were seen in the professional and business services (up 77,000); trade, transportation and utilities (up 34,000); construction (up 19,000); and financial activities (up 8,000) sectors. Small and medium-sized businesses (e.g., those with less than 500 employees) contributed over 74 percent of the net new jobs, with the small and medium-sized establishments (e.g., those with less than 500 employees) adding 163,000 workers for the month.

The Bureau of Labor Statistics will release official jobs numbers on Friday, and the expectation is for employment growth similar to the ADP report. Nonfarm payrolls are anticipated to grow around 200,000, with manufacturing employment between 5,000 and 10,000.

Chad Moutray is the chief economist, National Association of Manufacturers.

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Monday Economic Report – April 7, 2014

Here is the summary for this week’s Monday Economic Report:

Manufacturers appear to be recovering from softness in the first two months of the year, mainly due to the number of severe winter storms. The Institute for Supply Management (ISM) reported that its Purchasing Managers’ Index (PMI) edged higher, up from 53.2 in February to 53.7 in March. Production began expanding again, with the pace of new orders and exports picking up slightly. Despite some degree of progress in March, sentiment remains lower than just a few months ago. PMI values averaged 56.3 in the second half of last year, with sales and output measures exceeding 60—indicating strong growth—each month from August to December.

Likewise, new factory orders increased 1.6 percent in February, partially offsetting the sharp declines in December and January. Beyond autos and aircraft, however, durable goods sales were just barely higher, suggesting more needs to be done for broader growth in the sector. Meanwhile, the Dallas Federal Reserve Bank’s manufacturing survey reflected a rebound in activity consistent with other Federal Reserve districts. Texas manufacturers remain positive about sales, output, hiring and capital spending moving forward. For example, more than half of respondents anticipate increased demand over the next six months. Still, some cited regulatory, pricing pressure, workforce and foreign competition concerns.

On the hiring front, Friday’s jobs numbers provided mixed news for manufacturers. The sector lost 1,000 workers in March, mainly due to declines in nondurable goods industries. This was particularly disappointing given consensus expectations that were closer to the ADP’s estimates, which had a gain of 5,000 workers for the month. Yet, revisions to January and February data provided some comfort, adding 15,000 more employees than original estimates. As a result, the longer-term trend for manufacturing did not change much despite March’s lower figure. Manufacturers have added more than 600,000 workers since the end of the recession, and since August, the sector has generated an average of 12,125 net new jobs per month. Another positive in this report was that the average number of hours worked and average compensation both rose, findings that mirror the rebound in overall activity.

Meanwhile, the latest international trade figures were also disappointing. The U.S. trade deficit widened from $39.28 billion in January to $42.30 billion in February. This was the highest deficit since September and the result of a decrease in goods exports and an increase in service-sector imports. Petroleum exports were also marginally lower. The numbers were particularly discouraging given that manufactured goods exports in January and February of this year were 0.6 percent lower than the first two months of last year. Still, outside of softness in our goods exports to Canada, the other top-five export markets for U.S.-manufactured goods registered increases year-to-date in 2014 relative to 2013. In addition, there remains cautious optimism that export sales will improve in the coming months.

This week, the focus will be on the release of the minutes from the March Federal Open Market Committee (FOMC) meeting. The minutes will provide additional insights on the internal debates that led the Federal Reserve Board to continue tapering but to also change its forward guidance for short-term interest rates. On Friday, the release of producer price data should continue to show that overall inflation remains minimal. Other highlights include the latest data on consumer confidence, job openings, small business optimism and wholesale trade.

Chad Moutray is the chief economist, National Association of Manufacturers.

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ADP: Manufacturers Added 1,000 Workers in February, Rebounding from the Decline of January

Automatic Data Processing (ADP) said that manufacturing employment increased by 1,000 workers in February, rebounding from the contraction of 7,000 in January. Hiring has been softer the past two months, with poor weather conditions hampering demand and overall activity. As such, it has put a pause on the stronger growth seen at the end of 2013, which should have provided some momentum moving into the new year. Manufacturers added 67,000 net new workers from August to December, according to ADP, which stands in sharp contrast to being essentially flat from January to July of last year.

The good news is that weather challenges are temporary, and manufacturers continue to be mostly upbeat about growth moving forward. Indeed, Mark Zandi, Moody’s Analytics chief economist and the preparer of the ADP report, said, “Job growth is expected to improve with warmer temperatures.”

Looking at the overall figures, ADP reported that 139,000 net new private, nonfarm payroll workers were generated in February. Moreover, the data included some major revisions for last year, lowering nonfarm payroll growth by 128,000 from November to January. The bulk of that downward revision came in December, which was reduced by 100,000. Even with these changes, it is clear that nonfarm payroll growth in January and February has been weak, with hiring below the 187,000 monthly averages seen in 2013.

In February, the largest job gains were seen in the professional and business services (up 33,000); trade, transportation and utilities (up 31,000); and construction (up 14,000) sectors. Small and medium-sized businesses (e.g., those with less than 500 employees) contributed two-thirds of the net new jobs, with the smallest establishments (e.g., those with less than 50 employees) adding 59,000 workers for the month.

The Bureau of Labor Statistics will release official jobs numbers on Friday, and the expectation is for nonfarm payroll growth of roughly 150,000. Manufacturing employment is also anticipated to slow from the 15,500 monthly averages seen from August to January.

Chad Moutray is the chief economist, National Association of Manufacturers.

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ADP: Manufacturing Employment Contracted by 12,000 in January

Automatic Data Processing (ADP) said that manufacturing employment contracted by 12,000 workers on net in January, the first decline since July. Indeed, January’s decrease follows an increase in hiring of 56,000 net new employees between August and December, mirroring the stronger growth in demand and output seen in other measures. Poor weather conditions might have been a factor, negatively impacting production and consumer spending.

On a year-over-year basis, manufacturers added just 31,000 net new workers since January 2013, with weaknesses in the first half of the year dragging this figure lower.

Meanwhile, ADP reported that 175,000 net new nonfarm payroll workers were generated in January, a figure that was mostly in-line with consensus expectations. Service-providing firms added 160,000 workers in the month, with goods-producing businesses creating 16,000. Small and medium-sized businesses (e.g., those with less than 500 employees) contributed over 80 percent of the net new jobs. Professional and business services (up 49,000); trade, transportation and utilities (up 30,000); and construction (up 25,000) had the largest increases in January, with financial services employment unchanged.

The Bureau of Labor Statistics will release official jobs numbers on Friday, and the expectation is for nonfarm payrolls to be similar to what ADP reported. Manufacturers had averaged 16,000 additional employees each month from August to December, but January’s number should reflect some of the weather-related softness we see in recent data, including today’s ADP report.

Chad Moutray is the chief economist, National Association of Manufacturers.adp

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Monday Economic Report – November 4, 2013

Here is the summary of this week’s Monday Economic Report:

Manufacturers continue to report a pickup in activity, even as the pace of growth has varied in the different reports that have come out in the past week. On the more optimistic side, the Institute for Supply Management’s (ISM) Purchasing Managers’ Index (PMI) edged slightly higher from 56.2 in September to 56.4 in October. New orders and production remain the strongest elements of the ISM analysis, with both measures indicating strong growth from August to October and an improvement from May’s contraction. Overall, respondents to the ISM survey were mostly upbeat in their outlook. Hiring, however, experienced some easing, with other measures echoing that finding. Automatic Data Processing (ADP) found that just 5,000 manufacturing workers were added in October.

Other data suggest that manufacturing growth has been spottier than the ISM report’s upbeat assessment. While overall industrial production rose 0.6 percent in September, the bulk of that gain stemmed from rebounding output for utilities. Manufacturing production increased a much more modest 0.1 percent, with durable goods activity rising 0.5 percent but nondurable goods output off 0.3 percent. September’s increase extended the progress from August, with year-over-year growth of 2.6 percent. Yet, weaknesses persist in the broader sector.

Meanwhile, sentiment surveys from Markit and the Dallas Federal Reserve Bank noted some easing in perceptions, most likely temporarily due to the government shutdown. Interestingly, the Dallas survey’s weakened outlook did not carry through to other activity measures. Manufacturers in the district reported increases in output, sales, shipments, utilization and capital spending. This was true despite the drop in optimism.

Consumer sentiment also continued to slide. The Conference Board reported that consumer confidence fell sharply from 80.2 in September to 71.2 in October. This mirrors similar data from the University of Michigan and Thomson Reuters released the previous week. The political stalemate in Washington was a large factor in the increased pessimism, dampening Americans’ outlook. Fortunately, with the government shutdown over (at least for now), confidence should pick up again moving forward. Even before the budget impasse, however, retail sales numbers were showing signs of decelerating. Retail spending declined 0.1 percent in September. The year-over-year rate has fallen from 6.0 percent in June to 3.2 percent in September. However, September’s decrease was mainly attributable to slower auto sales for the month, with more modest increases in the wider market.

The other big headline last week was the Federal Reserve Board’s decision to keep its current monetary policies in place. Unlike the previous month’s Federal Open Market Committee (FOMC) meeting, a decision was not anticipated this time around. The Federal Reserve is not expected to start tapering its asset purchases until its December meeting, or perhaps more likely at either the January or March meetings next year. Either way, short-term interest rates should stay near zero until the unemployment rate reaches 6.5 percent and/or longer-term inflation expectations exceed 2.5 percent. This should mean that the Federal Reserve will pursue “highly accommodative” policies for throughout all or most of 2014. Of course, minimal pricing pressures allow the Federal Reserve to continue such actions. Core consumer and producer prices have kept below the Federal Reserve’s stated target of 2 percent for much of the past year.

This week, we will get two key measures of health on the U.S. economy, both of which were delayed due to the government shutdown. On Thursday, we will get our first read of third-quarter real GDP. My prediction is for growth of 1.9 percent in the third quarter, which is near the consensus estimate. That would be below the 2.5 percent real GDP growth rate in the second quarter, but in line with the 1.8 percent growth rate experienced in the first half of the year. In short, we continue to experience modest economic growth. On Friday, we will get new jobs numbers from the Bureau of Labor Statistics. I do not expect the figures to be much different than last week’s ADP report, which found that 130,000 nonfarm payroll workers were added in October.

Other highlights this week include new data on consumer credit, consumer sentiment, factory orders, job postings and personal spending. In addition, the latest edition of the Global Manufacturing Economic Update will be released on Friday.

Chad Moutray is the chief economist, National Association of Manufacturers.

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Monday Economic Report – October 7, 2013

Here is the summary for this week’s Monday Economic Report:

Policymakers’ ability to solve the country’s fiscal problems has once again come into focus with the government shutdown and the looming debt ceiling deadline. Manufacturers are eager for our leaders to solve these short-term differences and move on to address the nation’s long-term challenges. In the most recent NAM/IndustryWeek Survey of Manufacturers, nearly 85 percent of respondents said that they want the President and Congress to come to a long-term budget deal that effectively tackles the deficit and debt. In addition, three-fourths expressed the need to slow the growth of entitlement spending. Once these structural issues are solved, the country can begin to adopt pro-growth measures like those laid out in the NAM’s Growth Agenda that will allow the manufacturing sector and other businesses to expand and flourish. Instead, we are stuck in a budgetary impasse that creates more uncertainty and harbors increased frustrations with the political process.

With the government closed, statistical agencies will not be able to release new data. Last week, that meant that we did not get the latest jobs numbers as well as updates on construction spending and factory orders. There was some consternation about this, including stories in the USA Today and The Hill. Assuming the shutdown lasts through this week, we will not receive new data for international trade, job postings, producer prices, retail sales and wholesale trade. Private sources will only partially fill the vacuum left by the absence of government data. For instance, last week, Automatic Data Processing (ADP) announced its job estimates, with the Institute for Supply Management (ISM) releasing its closely watched Purchasing Managers’ Index (PMI) data. This week, the Federal Reserve will provide consumer credit data, and the Manufacturers Alliance for Productivity and Innovation (MAPI) will release its latest survey.

In terms of the numbers that were out last week, they tended to confirm the trends across the past few weeks. The ISM data show a clear uptick in manufacturing activity during the third quarter, with an average PMI of 55.8 in July, August and September. That is a significant improvement from a sector that essentially stalled during the second quarter, with the sharp acceleration in sales being a major factor. The third-quarter average for the new orders index was a surprisingly strong 60.7, up from 51.0 in the second quarter. Many regional surveys backed up this analysis, with rebounds in the latest reports from ISM-Chicago and the Chicago and Dallas Federal Reserve Banks.

One area that continues to lag behind is hiring. In many sentiment surveys, employment growth has been up only modestly. For the most part, manufacturers were positive about sales and output over the next 6 to 12 months, with some pickup predicted in hiring. The NAM/IndustryWeek survey predicted 1.1 percent growth on average in hiring in the manufacturing sector over the next year; yet, roughly 60 percent of respondents did not plan to change their employment levels at all. With that as context, it was perhaps not surprising that the ADP employment report continued to reflect disappointing jobs growth for manufacturing, up by just 1,000 in September and down by 12,000 year to date. Nonfarm payrolls also grew by a less-than-stellar 166,000 workers, suggesting a persistent hesitance to bring on new workers in the economy extending beyond the manufacturing sector.

Chad Moutray is the chief economist, National Association of Manufacturers.

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ADP: Manufacturers Added 5,000 Workers in August

Automated Data Processing (ADP) said that nonfarm payroll growth rose 176,000 in May, lower than in the previous two months but in-line with expectations. The average employment gain so far in the first eight months of 2013 was 170,000, suggesting that August’s overall job creation was on pace with what we have been seeing. This is marginally higher than the 163,000 average experienced in 2012, even as hiring slowed considerably in the second half of last year.

Manufacturing employment has been quite sluggish over the course of the past year. As evidence of this, the ADP data indicate that just 12,000 manufacturing jobs were added on net from August 2012 to August 2013. Moreover, hiring was negative in seven of the past 12 months. The good news was that manufacturers added 5,000 additional workers in August.

We will get new jobs data from the Bureau of Labor Statistics (BLS) tomorrow morning, which should make similar figures for nonfarm and manufacturing employment growth in August. With that said, BLS has had slightly higher year-over-year growth for the manufacturing sector (although still not robust by any means) of 40,000 additional workers from July 2012 to July 2013.

Looking specifically at the ADP report, service-providing sectors added 165,000 net new workers in the month, with the goods-producing sectors contributing 11,000. The largest gains came from professional and business services (up 50,000) and trade, transportation and utilities (up 40,000). Construction hiring rose by 4,000. Over 82 percent of net new jobs in the month came from small and medium-sized businesses (e.g., those with less than 500 employees).

Chad Moutray is the chief economist, National Association of Manufacturers.

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ADP: Manufacturing Employment Falls for the Fifth Straight Month

Automated Data Processing (ADP) reported that nonfarm payrolls rose 118,000 in November, lower than the 157,000 observed in October. Almost all of this increase stemmed from additional service sector workers, which increased by a net 114,000. Goods- producing firms hired just 4,000 net new employees in the month.

In the manufacturing sector, employment dropped by 16,000 workers. This was the fifth straight month of losses, according to ADP, totaling 60,000. This figure is larger than the official statistics from the Bureau of Labor Statistics (BLS), which reported declines of 27,000 in August and September with a gain of 13,000 in October. Nonetheless, it is an indication that the BLS results, when they are released on Friday for November, will be weak at best, and could be negative.

ADP said that the losses in the manufacturing workforce offset a healthy 23,000-worker increase in construction employment. The trade, transportation and utilities (up 22,000), professional business services (up 16,000), and financial activities (up 13,000) sectors also saw more hires in the month.

Breaking out the analysis by company size, larger businesses – particularly those with over 1,000 employees – added the most net new jobs, hiring an additional 62,000 workers. Small and medium-sized businesses hired 19,000 and 33,000 net new workers, respectively, in the month. This is a bit of a turnaround from prior months, when medium-sized (e.g., those with between 50 and 499 workers) led the net job gains.

In summary, the weaker employment numbers in November for manufacturing stemmed from two things. First, Hurricane Sandy reduced some activity, particularly in the Mid-Atlantic regions, and we have seen this storm have an impact in a number of economic statistics. But, the larger challenge right now is the uncertainty created by the fiscal cliff, with slowing global sales also playing a role. As Moody’s Analytics Chief Economist Mark Zandi, who produces this report for ADP, put it, “Businesses appear to be holding firm on their hiring and firing decisions.”

Chad Moutray is chief economist, National Association of Manufacturers.

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March ADP Report Shows Manufacturing Employment Growth

This morning the ADP National Employment Report for March was released and it showed that private-sector employment increased by 209,000 from February to March. The report showed solid growth for manufacturers stating that manufacturing employment increased by 23,000. 

While this is positive news for manufacturers we still have a long way to go. Manufacturers are still facing a growing number of headwinds which are impacting their ability to compete and grow. Energy costs are increasing and the regulatory burden continues to grow.

The BLS employment numbers are out on Friday so stay tuned for more information following the report’s release.

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ADP Reports 10,000 Additional Manufacturing Workers in January

According to Automated Data Processing (ADP), manufacturers added 21,000 net new employees in February, up from an increase of 16,000 in each of the past two months. This suggests that the stronger growth in industry employment has continued into February. Goods-producing firms – which include manufacturing, construction, and mining – added 46,000 net new jobs. This is the fifth consecutive month of gains in the goods-producing sectors, with 146,000 more employees added in that time frame.

For the economy as a whole, there were 216,000 new nonfarm, private payrolls, up from 173,000 last month. Small and medium-sized employers (e.g., those with less than 500 employees) accounted for all but 20,000 of those jobs.

Of course, the ADP figures are a precursor for the release of the official jobs report from the Bureau of Labor Statistics (BLS) on Friday. BLS reported 243,000 new nonfarm payrolls jobs and 50,000 manufacturing workers in January. Expectations are slightly lower payroll numbers for February, with the current consensus estimate of 150,000 new nonfarm payroll jobs. 

Chad Moutray is chief economist, National Association of Manufacturers.

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