Yesterday, ADP said a net 140,000 private sector jobs were created in February, just under the estimate of 150,000 and compared with 111,000 in January. Meanwhile, in the January “JOLTS” report, the quit rate fell to the lowest level since January 2018 not including Covid, writes Peter Boockvar, editor of The Boock Report.
Most of the hiring in the ADP report took place at companies with more than 50 employees. The service sector added 110k jobs with leisure/hospitality leading the way, adding 41k. That was followed by a 24k person increase in trade, transportation, and utilities and a 17k rise in financial activities. The information sector shed 2k.
On the goods side, 30k were added with almost all coming in construction (28k). But there was no breakdown on what type of construction, and it very well could be mostly government-driven manufacturing facilities being built. Manufacturing added 6k, stemming a weak trend.
In sum, there continues to be quite the difference between what ADP is telling us and the Bureau of Labor Statistics (BLS) is saying. The 3-month ADP private sector average is 136k vs. the six-month average of 127k. If the BLS private sector print comes in at the 160k that is expected, that would be a three-month average of 252k and a six-month average of 200k.
Looking out 12 months, they converge. Between continuing claims and many other anecdotes (including the ISMs), I believe reality matches more with what ADP has said of late, more so than the BLS.
Wage growth is still very good. For “job stayers,” wages rose 5.1% year-over-year vs. 5.2% in the month before. For “job changers,” they saw an increase of 7.6% YOY. That was an improvement from the 7.2% pace seen in January. While these figures are well off their highs, these are still pretty heady wage gains.
But a few weeks ago, the CEO of ZipRecruiter said this on the firm’s earnings call: “While in 2021 and 2022, workers left jobs for higher wages, wage inflation has abated and macroeconomic uncertainty has increasingly kept people in their current roles. With fewer job openings and lower employee turnover, ‘The Great Resignation’ has turned into ‘The Big Stay’.”
As for job openings, they were little changed from December at 8.863mm. But the hiring rate ticked down to 3.6% after rising by two tenths in the month before, just off the lowest since 2017, also not including Covid.
