ADP Says Private Sector Added 281K Jobs In June, Other Data Suggests Slight Slowdown In Small Business Hiring

Out Wednesday, ADP's June National Employment Report shows private payrolls adding 281,000 jobs last month, well above economists' expectations. While not perfectly correlated, the ADP report will likely raise hopes that the Bureau of Labor Statistics will reveal a strong June jobs number Thursday. The BLS report, typically released on the first Friday of the month, will come out a day early due to the Fourth of July holiday.

Mark Zandi, chief economist of Moody's  Analytics, which collaborates with the payroll company on the report, noted in a statement on the results, "The job market is steadily improving. Job gains are broad based across all industries and company sizes. Judging from the job market, the economic recovery remains fully intact and is gaining momentum."

ADP — Automatic Data Processing – says that private companies added 245,000 and 191,000 jobs in November and December 2013 respectively. The results plummeted to 121,000 in January and 193,000 in February before finally crossing back over 200,000 in April. ADP maintained its May reading of 179,000 in the latest report.

In a note on the ADP number  PNC economists Stuart Hoffman and Gus Faucher maintained a 200,000 BLS jobs added forecast, writing that Wednesday's report "adds upside" to the call. "The labor market recovery appears to be firing on all cylinders and is finally self-sustaining," wrote the economists. "The very good June ADP number is further proof that weaker GDP numbers recently are not a true reflection of the U.S. economy. The economy took a hit in early 2014 with the very difficult winter, but now it is expanding and the labor market recovery is finally hitting its stride."

ADP’s CEO Carlos Rodriguez called the number a "welcome boost." Adding, "The number of construction jobs added was particularly encouraging, representing the highest total in that industry since February of 2006."

All major industries covered by ADP’s report added jobs last month with professional and business services adding 77,000 jobs, trade/transportation/utilities adding 50,000 and construction adding 36,000. Manufacturing and financial activities industries were somewhat behind other industries adding 12,000 and 11,000 jobs respectively. With 230,000 jobs added service-providing businesses significantly out-hired goods-producing business which added 51,000 jobs.

By company size, ADP showed businesses with less than 50 employees adding the most jobs in June at 117,000 with the smallest — under 20 employees — doing 56% of small business hiring. Mid-sized businesses with 50 to 499 employees were not far behind with 115,000 jobs added. Larger businesses added 49,000 jobs.

Earlier this week  Paychex , however, another payroll provider, released its monthly Paychex | IHS Small Business Jobs Index told a slightly different small business story. The index looks at changes in worker count at 350,000 of Paychex’s 570,000 clients. Each business in the sample group has fewer than 50 employees and 80% have fewer than 20. On a national basis the index decreased slightly in June to 101.07, this is the second month in a row of declines although the index is near a record high. The barometer has increased 0.23% in the last 12-months.

“With the first six months of the year behind us, we continue to see a positive trend in small business employment growth,” said Martin Mucci, president and CEO of Paychex. “Even though the growth rate has slowed slightly over the past two months, the consistent growth in key regions, states, and metro areas is an encouraging sign.”

The mountain region — which includes Idaho, Nevada, Arizona, Utah, Montana, Wyoming, Colorado and New Mexico — had the highest 12 months growth rate in April at 1.77%. The west south central region — Texas, Oklahoma, Arkansas and Louisiana — had the biggest contraction at negative 0.13%.

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