) report fails to answer questions about the economy raised by
other recent soft readings. The report came short of
expectations, but wasn't entirely out of line with the recent
Perhaps the service sector ISM survey coming out a little
later will give us a bit more color, but the focus now will now
be on Friday's government jobs report to clear the air. This
uncertain backdrop means that stocks won't likely be able to
build on Tuesday's positive bounce.
The ADP report came in weaker than expected, with the January
private-sector jobs tally at 175K tally and a downward revision
to the December number. The revision to the December rally, which
was materially in conflict with the government data that month,
is fairly modest (227K now vs. 238K originally vs. the BLS tally
of 74K). That said, the January ADP jobs tally is the third
sequentially lower number in a row (289K in November vs. 227K in
December vs. 175K in January), likely indicating some loss of
momentum in the labor market.
The gains were broad-based, with small businesses (employers
having less than 50 employees) adding 75K jobs in January.
Medium-sized businesses (less than 500 employees) added +66K
jobs, while large businesses (1000+ employees) added +34K jobs
during the month.
The goods-producing sectors added +16K jobs in January, with
25K Construction gains offset by 12K lost in manufacturing. The
construction numbers don't appear to show any weather impact, or
maybe the ADP report doesn't do a good job of capturing weather
The ADP miss notwithstanding, the report isn't that out of the
range with the recent trend-line and isn't indicative a material
downshift in the economy's growth momentum, along the lines of
Monday's manufacturing ISM and December's government jobs report.
If today's ADP report is more reflective of ground realities in
the labor market, then we should expect positive revisions to the
December jobs tally in Friday's report.
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