The ADP April estimate of private sector hiring released on Wednesday pointed to strong hiring by middle market businesses amid robust service sector and goods producing sector hiring.
The middle market accounted for 52.7 percent, or 145,000 out of 275,000, of the total change in private sector employment. Small firms added 77,000 jobs, or 28 percent of overall hiring, while large firms added 19.3 percent, or 53,000 jobs to the monthly gain. This is likely a function of firms catching up with hiring after a three-month slower pace of job gains relative to the final six months of 2018. Regardless, in our estimation, labor market dynamics point to another solid gain in April hiring in Friday’s monthly nonfarm payroll report and firms continue to face problems finding qualified workers.
The ADP report has a long history of large misses, especially to the upside, relative to the Bureau of Labor Statistics monthly estimate. Thus we are not changing our monthly employment forecast for April of a 207,000 gain in total employment with the unemployment rate remaining unchanged at 3.8 percent.
Nevertheless job gains by sector inside the report were impressive. The goods-producing sector increased by 52,000 and the services-providing sector jumped by 223,000 jobs.
