US: ADP employment indicated healthy growth in nonfarm private sector jobs - Nomura

The US ADP employment report indicated healthy growth in nonfarm private sector jobs in June, which rose 158k, near Nomura’s expectations but slightly below consensus (Nomura: 160k, Consensus: 188k), according to analysts at Nomura.

Key Quotes

“All the gains came from the service-providing sector, with professional & business services increasing by 69k and education & health adding an additional 28k. While manufacturing employment increased by 6k, this gain was offset by a decrease of 4k in mining and 2k in construction, resulting in a flat net reading for the goods-producing sector. The ADP numbers today support our forecast of a healthy reading tomorrow for the BLS employment report for June, with some upside risk due to seasonal factors involving the Memorial Day weekend in May.”

“Initial jobless claims increased slightly for the week ending 1 July, ticking up by 4k to 248k, but remained within a low range in a tight labor market where firms are reluctant to let go of workers they may have a hard time replacing. Consistent with this view, the four-week moving average, a less volatile series, increased only 1k to 243k. For the week ending 24 June, continuing claims increased by 11k to 1956k.”

“The four-week moving average of this series ticked up slightly to 1945k from 1938k. While continuing claims have increased for each of the past five weeks, this uptrend follows a steady decline during the first five months of 2017. On net, continuing claims have fallen by 125k this year. However, the recent leveling off of continuing claims implies that the rapid fall in the household unemployment rate since January may be moderating somewhat.”