US private sector adds fewer jobs than expected in November - ADP

Private sector employment in the US rose less than expected in November, according to data released by the ADP on Thursday.

Employers added 179,000 jobs versus expectations for a 195,000 increase. Meanwhile, October's total was revised down from 227,000 to 225,000.

Small businesses with fewer than 50 employees added 46,000 jobs, while medium-sized businesses with between 50 and 499 employees created an extra 119,000 jobs. Large companies with 500 or more employees recruited an extra 13,000 people.

The goods-producing sector created 16,000 jobs, while the services sector added 163,000 jobs, with the biggest contribution coming from professional/business services.

Mark Zandi, chief economist at Moody’s Analytics, said: "Job growth is strong, but has likely peaked. This month’s report is free of significant weather effects and suggests slowing underlying job creation. With very tight labour markets, and record unfilled positions, businesses will have an increasingly tough time adding to payrolls."

Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said: "Although the labour market performed well, job growth decelerated slightly. Midsized businesses added nearly 70% of all jobs this month. This growth points to the midsized businesses’ ability to provide stronger wages and benefits. It also suggests they could be more insulated from the global challenges large enterprises face."

Pantheon Macroeconomics said this is slightly below the trend, but it follows two months of above-trend readings, so it’s unlikely that it signals any meaningful shift in job growth.

"The uptick in jobless claims since Hurricanes Florence and Michael likely explains part of the dip to 179K in Oct from an average of 233K in Sep/Oct; remember, ADP’s number is generated by a model which includes macroeconomic variables, as well as data collected from firms which use ADP’s payroll processing services," said economist Ian Shepherdson.

"We expect tomorrow's official number to beat the ADP reading because the BLS data will include people returning to work from Hurricane Michael, which hit in the October survey week. ADP isn’t directly affected by hurricanes because it counts names on payroll lists, while the BLS only counts people who were paid during the survey period, so hourly-paid part-timers can drop off the numbers after storms, and then return the following month. We look for 220K tomorrow. As far as we can tell, labor demand remains extremely strong."

Capital Economics economist Andrew Hunter said the 179,000 increase in the ADP measure supports the research consultancy's forecast that the official non-farm payrolls figures on Friday will show a similar 190,000 gain.

"That would represent a slowdown from October’s reading, but should still be enough to convince the Fed to raise interest rates again later this month," he said.