U.S. Economics – Labor Market

Intro

Private sector payrolls increased by 155,000 in March, according to the latest ADP National Employment Report. This was above the prior month, which was revised higher to 84,000 from 77,000. Underneath the headline, job gains by industry and by firm size displayed better breadth and improving y/y trends.

Labor Market

The Signals:

• • National ADP Payrolls (Chart 1)
    • At the headline level, private sector jobs registered a monthly net change of 155,000 in March, above the upwardly revised 84,000 from the prior month.
      • The y/y growth rate accelerated to 1.40% from 1.35%, its fastest pace since August 2023.
  • Industry Payroll Mix (Chart 2)
    • Professional & Business Services, Financial Activities, and Manufacturing led payroll gains for March, carrying over positive momentum from February.
    • Trade, Transportation, & Utilities and Natural Resources & Mining were both negative.
      • • Looking at the annual change in y/y growth rates, only Education & Health Services was below last year’s y/y growth rate while Information, Financial Activities, Professional & Business Services, and Other Services were between 130 and 360 basis points higher.
  • Firm Size Payroll Mix (Chart 3)
    • Large firms (500+ employees) and small firms (1-19 employees) led on a m/m basis at 59,000 and 42,000, respectively.
    • The cohort that falls just underneath large firm status (250-499 employees) was the only category to post slower payroll growth, moving from 39,000 in February to 9,000 in March.
      • • The annual change in the y/y growth rate for firms with 20 to 49 employees was negative compared to last year while the remaining categories were positive.
  • Median Change in Annual Pay (Chart 4)
    • We tend to focus on labor data for what it can tell us about the consumer spending setup; thus, the wage component is worth highlighting alongside job growth.
      • Importantly from this report, the industries that have been improving on the payroll side are also elevated in terms of pay – particularly Manufacturing (+21,000 jobs), Financial Activities (+38,000 jobs), and Professional & Business Services (+57,000 jobs) with their respective median pay at $72,300 (4.8% y/y), $72,200 (5.3% y/y), and $71,900 (4.4% y/y).
      • Meanwhile, Trade, Transportation, & Utilities (-6,000 jobs) and Education & Health Services (+12,000 jobs) median pay comes in at $57,800 (4.3% y/y) and $48,200 (4.7% y/y), respectively.

The Takeaway:

• ADP Payrolls improved m/m, and that growth largely came from industries with the highest pay, which should be positive for the consumer spending set up.

Visuals:

(Chart 1)

(Chart 2)

(Chart 3)

(Chart 4)

Source: Macrobond

Market Trends:

Source: Macrobond

The views expressed herein are presented for informational purposes only and are not intended as a recommendation to invest in any particular asset class or security or as a promise of future performance.  The information, opinions, and views contained herein are current only as of the date hereof and are subject to change at any time without prior notice.